New and Refunding Issue Ratings: Moody’s: “Aaa”; “S&P: “AA+”Book-Entry-Only See “RATINGS”

In the opinion of Ice Miller LLP, Indianapolis, Indiana, and Coleman Stevenson & Montel, LLP, Indianapolis, Indiana, Co-Bond Counsel, under existing laws, regulations, judicial decisions and rulings, interest on the Series V-1 Bonds (as hereinafter defined) will be excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended. This opinion is based on certain certifications, covenants and representations of the University and others, and is conditioned on continuing compliance therewith. Interest on the Series V-2 Bonds (as hereinafter defined) is not excluded from gross income for federal tax purposes. In the opinion of Co-Bond Counsel, under existing laws, interest on the Series V Bonds (as hereinafter defined) will be exempt from income taxation in the State of Indiana. See “TAX MATTERS” and Appendix E.

$60,265,000INdIANA UNIvERSITy

Tax-Exempt Student Fee BondsSeries v-1

$47,485,000INdIANA UNIvERSITy

Taxable Student Fee BondsSeries v-2

dated: date of delivery due: August 1, as shown on the inside cover

The Indiana University Tax-Exempt Student Fee Bonds, Series V-1 (the “Series V-1 Bonds”), and the Indiana University Taxable Student Fee Bonds, Series V-2 (the “Series V-2 Bonds” and, together with the Series V-1 Bonds, the “Series V Bonds”), will be issued by The Trustees of Indiana University (the “University”) only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Series V Bonds will be made in book-entry-only form. Purchasers of beneficial interests in the Series V Bonds (“Beneficial Owners”) will not receive physical delivery of certificates representing their interests in the Series V Bonds. The Series V Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Interest on the Series V Bonds is payable on February 1, 2013, and on each February 1 and August 1 thereafter. Principal of and interest on the Series V Bonds, together with any premium thereon, will be paid directly to DTC by The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), so long as DTC or its nominee is the registered owner of the Series V Bonds. The final disbursements of such payments to the Beneficial Owners of the Series V Bonds will be the responsibility of the DTC Participants and the Indirect Participants, as described herein. See “DESCRIPTION OF SERIES V BONDS—Book-Entry-Only System.”

Certain of the Series V Bonds are subject to redemption prior to maturity as described in this Official Statement. See “DESCRIPTION OF SERIES V BONDS—Redemption.”

The Series V Bonds are being issued pursuant to resolutions adopted by the Board of Trustees of the University on August 17, 2012, and by its Finance and Audit Committee on October 11, 2012, and a Trust Indenture dated as of October 1, 1985, as previously supplemented and amended, and as further supplemented by a Twenty-First Supplemental Indenture dated as of October 15, 2012 (collectively, the “Indenture”), between the University and the Trustee. The proceeds of the Series V Bonds will be used to (a) refund certain of the University’s outstanding Indiana University Student Fee Bonds, as more fully described herein; (b) finance or refinance all or any portion of the costs of certain qualified energy savings projects; (c) refund the University’s outstanding qualified energy savings notes, the proceeds of which were applied to pay such costs; and (d) pay certain related costs. See “PLAN OF FINANCE.”

The Series v Bonds, together with all Indiana University Student Fee Bonds heretofore or hereafter issued on a parity therewith, are limited obligations of the University, payable solely from and secured exclusively by a pledge of and parity first lien on Student Fees (as defined herein) and certain funds pledged under the Indenture. The Series v Bonds are not a general obligation, debt or liability, or a charge against any property or fund, of the University or the State of Indiana, except to the extent of the pledge of Student Fees and certain funds pledged under the Indenture for payment of Series v Bonds. See “SECURITy FOR SERIES v BONdS.”

A detailed maturity schedule is set forth on the inside cover.

This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement, including the appendices hereto, to obtain information essential to making an informed investment decision.

The Series V Bonds are being offered when, as and if issued by the University and received by the Underwriters, subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of legality by Ice Miller LLP, Indianapolis, Indiana, and Coleman Stevenson & Montel, LLP, Indianapolis, Indiana, Co-Bond Counsel. Certain legal matters will be passed upon for the University by Jacqueline A. Simmons, Esq., Bloomington, Indiana, Vice President and General Counsel to the University, and for the Underwriters by Barnes & Thornburg LLP, Indianapolis, Indiana. It is expected that the Series V Bonds in definitive form will be available for delivery to DTC in New York, New York, on or about October 26, 2012.

J.P. MorganGoldman, Sachs & Co. Loop Capital Markets

Official Statement Dated: October 17, 2012

Maturity Schedule

$60,265,000 Indiana University Tax-Exempt Student Fee Bonds

Series V-1

Principal Amount

Due August 1

Interest Rate Price CUSIP

$1,520,000 2013 2.50% 101.739% 4551676Q41,575,000 2014 4.00 106.467 4551676R23,210,000 2015 3.00 107.110 4551676S01,480,000 2016 5.00 116.594 4551676T85,110,000 2017 3.00 110.608 4551676U55,100,000 2018 5.00 122.914 4551676V35,365,000 2019 5.00 124.761 4551676W15,640,000 2020 5.00 125.892 4551676X95,925,000 2021 5.00 126.482 4551676Y78,845,000 2022 5.00 127.402 4551676Z44,825,000 2023 5.00 125.779* 4551677A85,065,000 2024 5.00 124.677* 4551677B63,220,000 2025 5.00 123.982* 4551677C43,385,000 2026 5.00 123.291* 4551677D2

* Priced to the August 1, 2022, par call.

$47,485,000 Indiana University Taxable Student Fee Bonds

Series V-2

Principal Amount

Due August 1

Interest Rate Price CUSIP

$ 1,085,000 2013 0.295% 100.00% 4551677E01,090,000 2014 0.562 100.00 4551677F77,230,000 2015 0.685 100.00 4551677G57,295,000 2016 1.051 100.00 4551677H33,575,000 2017 1.301 100.00 4551677J9

10,960,000 2018 1.612 100.00 4551677K68,045,000 2019 1.962 100.00 4551677L48,205,000 2020 2.227 100.00 4551677M2

NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE UNIVERSITY OR THE UNDERWRITERS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE UNIVERSITY OR THE UNDERWRITERS. THE INFORMATION IN THIS OFFICIAL STATEMENT HAS BEEN OBTAINED FROM THE UNIVERSITY AND OTHER SOURCES CONSIDERED TO BE RELIABLE, BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS AND IS NOT TO BE CONSTRUED AS A REPRESENTATION BY THE UNDERWRITERS. ANY INFORMATION OR EXPRESSIONS OF OPINION IN THIS OFFICIAL STATEMENT ARE SUBJECT TO CHANGE WITHOUT NOTICE AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE OF THE SERIES V BONDS SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE AS TO THE AFFAIRS OF THE UNIVERSITY SINCE THE DATE OF THIS OFFICIAL STATEMENT.

THE UNDERWRITERS HAVE PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFICIAL STATEMENT. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH AND AS A PART OF THEIR RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.

THE SERIES V BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE UNIVERSITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES V BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES V BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE SERIES V BONDS IN ANY JURISDICTION IN WHICH OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE.

_____________________

TABLE OF CONTENTS

Page

INTRODUCTION ......................................................................................................................................................... 1 University ................................................................................................................................................................. 1 Series V Bonds ......................................................................................................................................................... 1

DESCRIPTION OF SERIES V BONDS ....................................................................................................................... 2 General ...................................................................................................................................................................... 2 Redemption ............................................................................................................................................................... 3 Registration, Transfer and Exchange ........................................................................................................................ 5 Book-Entry-Only System.......................................................................................................................................... 5

SOURCES AND USES OF FUNDS ............................................................................................................................. 7 PLAN OF FINANCE .................................................................................................................................................... 8

Refunding Program ................................................................................................................................................... 8 Qualified Energy Savings Projects ........................................................................................................................... 8

SECURITY FOR SERIES V BONDS .......................................................................................................................... 9 Student Fees ............................................................................................................................................................ 10 No Reserve Fund .................................................................................................................................................... 10 Fee Covenant .......................................................................................................................................................... 10 Issuance of Additional Bonds ................................................................................................................................. 10

DEBT SERVICE COVERAGE .................................................................................................................................. 11 ANNUAL DEBT SERVICE REQUIREMENTS ........................................................................................................ 11 CAPITAL PROGRAMS AND ADDITIONAL FINANCING ................................................................................... 12

General .................................................................................................................................................................... 12 State Appropriations to University ......................................................................................................................... 12

INDIANA UNIVERSITY ........................................................................................................................................... 13 General .................................................................................................................................................................... 13 Certain Financial and Operating Information ......................................................................................................... 13 Financial Report ...................................................................................................................................................... 13 Forward Looking Statements .................................................................................................................................. 13

TAX MATTERS ......................................................................................................................................................... 14 AMORTIZABLE BOND PREMIUM ......................................................................................................................... 15 ENFORCEABILITY OF RIGHTS AND REMEDIES ............................................................................................... 15 LITIGATION .............................................................................................................................................................. 15 RATINGS .................................................................................................................................................................... 16 CERTAIN LEGAL MATTERS .................................................................................................................................. 16 UNDERWRITING ...................................................................................................................................................... 16 VERIFICATION OF MATHEMATICAL COMPUTATIONS .................................................................................. 17 CONTINUING DISCLOSURE ................................................................................................................................... 17

General .................................................................................................................................................................... 17 Dissemination Agent ............................................................................................................................................... 19 Remedy ................................................................................................................................................................... 19 Modification of Continuing Disclosure Agreement ................................................................................................ 20

MISCELLANEOUS .................................................................................................................................................... 20 Appendix A: INDIANA UNIVERSITY ............................................................................................................. A-1 Appendix B: FINANCIAL REPORT OF THE UNIVERSITY FOR THE FISCAL YEAR ENDED JUNE 30, 2011 ................................................................... B-1 Appendix C: DEFINITIONS .............................................................................................................................. C-1 Appendix D: SUMMARY OF CERTAIN PROVISIONS OF INDENTURE ................................................... D-1 Appendix E: FORM OF OPINIONS OF CO-BOND COUNSEL ..................................................................... E-1 Appendix F: SUMMARY OF REFUNDED BONDS ....................................................................................... F-1

OFFICIAL STATEMENT relating to

$60,265,000 $47,485,000 Indiana University Tax-Exempt Student Fee Bonds Indiana University Taxable Student Fee Bonds

Series V-1 Series V-2

INTRODUCTION

This Official Statement, including the cover page and the appendices, is furnished by The Trustees of Indiana University (the “University”) to provide information concerning the offering of $60,265,000 aggregate principal amount of its Indiana University Tax-Exempt Student Fee Bonds, Series V-1 (the “Series V-1 Bonds”), and $47,485,000 aggregate principal amount of its Indiana University Taxable Student Fee Bonds, Series V-2 (the “Series V-2 Bonds” and, together with the Series V-1 Bonds, the “Series V Bonds”).

University

The University was founded in 1820 and is one of the largest state-supported universities in the United States. The Indiana University system includes eight campuses with core campuses located in Bloomington and Indianapolis and with other campuses located in Gary, South Bend, Fort Wayne, Kokomo, Richmond and New Albany. The University is governed by a nine member Board of Trustees which, under various enabling statutes, has the decision and policy-making authority to carry out the programs of the University, approve the budget and establish all student fees and charges. See Appendix A, “INDIANA UNIVERSITY.”

Series V Bonds

The Series V Bonds are being issued by the University to provide funds to (a) refund certain of the University’s outstanding Indiana University Student Fee Bonds more particularly described in Appendix F hereto (the “Refunded Bonds”); (b) finance or refinance a portion of the costs of certain qualified energy savings projects; (c) refund the University’s outstanding qualified energy savings notes, the proceeds of which were applied to pay such costs; and (d) pay certain related costs, including costs of issuance. See “PLAN OF FINANCE.”

The Series V Bonds are authorized pursuant to Indiana Code 21-34-6 through 21-34-10 and Indiana Code 5-1-5, each as amended (the “Act”). The Act empowers the University to sell bonds to (i) acquire, erect, construct, reconstruct, improve, rehabilitate, remodel, repair, complete, extend, enlarge, furnish, equip and operate certain buildings, structures, improvements or facilities necessary for carrying on the purposes of the University, and to finance qualified energy savings projects; and (ii) refund outstanding bonds, notes and other obligations issued pursuant to the Act or other applicable law for such buildings, structures, improvements or facilities, or qualified energy savings projects. The Series V Bonds are being issued pursuant to resolutions adopted by the Board of Trustees of the University on August 17, 2012, and by its Finance and Audit Committee on October 11, 2012 (collectively, the “Resolutions”), and in accordance with the provisions of a Trust Indenture, dated as of October 1, 1985 (the “Original Indenture”), as previously supplemented and amended, and as further supplemented by a Twenty-First Supplemental Indenture dated as of October 15, 2012 (collectively, the “Indenture”), between the University and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

The Series V Bonds, together with $354,112,438 aggregate outstanding principal amount of Indiana University Student Fee Bonds (including the accreted value of certain outstanding capital appreciation bonds as of August 1, 2012, and after giving effect to the issuance of the Series V Bonds and the refunding and defeasance of the Refunded Bonds (as herein defined)), and any additional bonds hereafter issued on parity therewith (collectively, “Parity Bonds”), are limited obligations of the University, payable solely from and secured exclusively by a pledge of and parity first lien on certain pledged funds (the “Pledged Funds”), including: (i) all academic fees (including tuition), however denominated, assessed by the University against students attending Indiana University, except certain dedicated fees and other fees released from the lien of the Indenture (such academic fees, subject to such exceptions, the “Student Fees”); and (ii) to the extent provided in the Indenture, the funds created under the

2

Indenture which are held by the Trustee, except that neither the Series V Bonds nor any currently outstanding Parity Bonds (except the Series I Bonds and Series J Bonds (each as defined in Appendix C)) have any claim on the Reserve Fund (as defined in Appendix C) established under the Original Indenture or any other reserve fund. Additional Parity Bonds issued in the future may or may not have a claim on the Reserve Fund. See “SECURITY FOR Series V Bonds.” The University may issue additional bonds under the Indenture (“Additional Bonds”), consisting of either Parity Bonds or bonds subordinated to Parity Bonds as to principal and interest repayment (“Subordinated Bonds”), which are payable out of Student Fees and other Pledged Funds (all obligations issued under the Indenture which are payable out of Student Fees and other Pledged Funds, including all Parity Bonds and any Subordinated Bonds, collectively, the “Bonds”). See “SECURITY FOR SERIES V BONDS—Issuance of Additional Bonds.”

The Bonds are not a general obligation, debt or liability, or a charge against any property or fund, of the University or the State of Indiana (the “State”), except to the extent of the pledge of Student Fees and other Pledged Funds. See “SECURITY FOR SERIES V BONDS.”

Interest on the Series V Bonds will accrue from the date of delivery thereof, at the rates per annum set forth on the inside cover page of this Official Statement, and will be payable on February 1, 2013, and on each February 1 and August 1 thereafter. See “DESCRIPTION OF SERIES V BONDS—General.”

The Series V Bonds will be issued only as fully registered bonds in denominations of $5,000 or any integral multiple thereof. When issued, the Series V Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Series V Bonds will be made in book-entry-only form. Purchasers of beneficial interests in the Series V Bonds (“Beneficial Owners”) will not receive physical delivery of certificates representing their interests in the Series V Bonds. Interest on the Series V Bonds, together with the principal thereof, will be paid by the Trustee directly to DTC or its nominee, so long as DTC or its nominee is the registered owner of the Series V Bonds. The final disbursements of such payments to the Beneficial Owners of the Series V Bonds will be the responsibility of the DTC Participants and the Indirect Participants (each as herein defined). Transfer of ownership interests in the Series V Bonds will be accomplished by book entry by DTC. See “DESCRIPTION OF SERIES V BONDS—Book-Entry-Only System.”

DESCRIPTION OF SERIES V BONDS

General

The Series V Bonds will be issued in the aggregate principal amount of $107,750,000 and will be dated and bear interest from the date of delivery thereof. Interest on the Series V Bonds will be payable in arrears on February 1, 2013, and on each February 1 and August 1 thereafter (each such date, an “Interest Payment Date”) and at maturity, or upon earlier redemption. The Series V Bonds will bear interest (calculated on the basis of a 360-day year consisting of twelve 30-day months) at the rates and will mature on the dates and in the principal amounts set forth on the inside cover page of this Official Statement. The Series V Bonds will be issued only in fully registered form in denominations of $5,000 or any integral multiple thereof.

The principal of and premium, if any, on each Series V Bond will be payable upon presentation and surrender thereof by the registered owners thereof (the “Bondholders”) (such Bondholders being DTC or its nominee for so long as the Series V Bonds are held in book-entry-only form) at the Principal Operations Office of the Trustee. Interest on the Series V Bonds will be paid by check of the Trustee mailed on the business day prior to each Interest Payment Date to the Bondholders appearing on the registration books maintained by the Trustee as of the close of business on the fifteenth day of the month immediately preceding such Interest Payment Date (the “Record Date”). Bondholders of at least $1,000,000 in principal amount may, however, request in writing that such payment be made by ACH (as defined in Appendix C) or wire transfer, with settlement on such Interest Payment Date, to an account located in the continental United States, which account is specified in writing prior to the Record Date for such Interest Payment Date, and upon compliance with the reasonable regulations of the Trustee. Any payment made by ACH or wire transfer which is not accepted by the receiving bank may be sent by check.

Each Series V Bond will bear interest from the Interest Payment Date next preceding its authentication date, unless (i) such authentication date is prior to the close of business on the Record Date preceding the first

3

Interest Payment Date, in which case such Series V Bond will bear interest from the date of delivery thereof, (ii) such date of authentication is an Interest Payment Date to which interest on the Series V Bonds has been paid in full or duly provided for, in which case such Series V Bond will bear interest from such date of authentication, or (iii) such date of authentication is after the close of business on a Record Date and before the next Interest Payment Date, in which case such Series V Bond will bear interest from such Interest Payment Date. However, if interest on any Series V Bonds is in default, Series V Bonds issued in exchange for such Series V Bonds surrendered for transfer or exchange will bear interest from the last date to which interest has been paid in full on the Series V Bonds or, if no interest has been paid on the Series V Bonds, from the date of delivery thereof.

So long as the Series V Bonds are held in book-entry-only form, payments of principal of and premium, if any, and interest on the Series V Bonds will be paid by the Trustee only to DTC or its nominee by wire transfer on the payment date in same-day funds. Neither the University nor the Trustee will have any responsibility for a Beneficial Owner’s receipt from DTC or its nominee, or from any DTC Participant or Indirect Participant, of any payments of principal of or interest on any Series V Bonds. See “Book-Entry-Only System.”

Redemption

Series V-1 Bonds: Optional Redemption. The Series V-1 Bonds maturing on or after August 1, 2023, are subject to redemption prior to maturity at the option of the University at any time on or after August 1, 2022, in whole or in part, in any order of maturity designated by the University (less than all of such Series V-1 Bonds of a particular maturity to be selected by lot in such manner as may be designated by the Trustee), at a redemption price of 100% of the principal amount of each Series V-1 Bond to be redeemed, plus accrued interest to the date fixed for redemption.

Series V-2 Bonds: Make-Whole Optional Redemption. The Series V-2 Bonds are subject to redemption on any date, at the option of the University, in whole or in part, at a redemption price (the “Make-Whole Optional Redemption Price”) equal to the greater of (i) 100% of the principal amount of the Series V-2 Bonds to be redeemed; or (ii) the sum of the present value of the remaining scheduled payments of principal and interest on the Series V-2 Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Series V-2 Bonds are to be redeemed, discounted to the date on which the Series V-2 Bonds are to be redeemed on an annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate (defined below) plus 10 basis points (0.10%), plus accrued interest on the Series V-2 Bonds to be redeemed to the redemption date.

At the request of the Trustee, the redemption price of the Series V-2 Bonds to be redeemed at the option of the University will be determined by an independent accounting firm, investment banking firm or financial advisor (the “Designated Pricing Agent”) retained by the University at the University’s expense to calculate such redemption price. The Trustee and the University may conclusively rely on the determination of such redemption price by the Designated Pricing Agent and will not be liable for such reliance. For purposes of determining the Make-Whole Optional Redemption Price:

“Treasury Rate” means, as applicable, with respect to any redemption date for a particular Series V-2 Bond, the rate per annum, expressed as a percentage of the principal amount, equal to the semiannual equivalent yield to maturity or interpolated maturity of the Comparable Treasury Issue, assuming that the Comparable Treasury Issue is purchased on the redemption date for a price equal to the Comparable Treasury Price, as calculated by the Designated Pricing Agent.

“Comparable Treasury Issue” means, as applicable, with respect to any redemption date for a particular Series V-2 Bond, the United States Treasury security or securities selected by the Designated Pricing Agent which have an actual or interpolated maturity comparable to the remaining average life of the Series V-2 Bond to be redeemed, and that would be utilized in accordance with customary financial practice in pricing new issues of debt securities of comparable maturity to the remaining average life of the Series V-2 Bond to be redeemed.

“Comparable Treasury Price” means, as applicable, with respect to any redemption date for a particular Series V-2 Bond, (i) if the Designated Pricing Agent receives at least four Reference Treasury Dealer Quotations, the average of such quotations for such redemption date, after excluding the highest and lowest Reference Treasury

4

Dealer Quotations, or (ii) if the Designated Pricing Agent obtains fewer than four Reference Treasury Dealer Quotations, the average of all such quotations.

“Reference Treasury Dealer” means each of the four firms, specified by the Designated Pricing Agent, that are primary United States Government securities dealers in the City of New York (each a “Primary Treasury Dealer”); provided, however, that if any of them ceases to be a Primary Treasury Dealer, the Designated Pricing Agent will substitute another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and as applicable for any redemption date for a particular Series V-2 Bond, the average, as determined by the Designated Pricing Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Designated Pricing Agent by such Reference Treasury Dealer at 3:30 p.m., New York City time, at least two days preceding such redemption date.

Selection of Bonds to be Redeemed. For so long as the Series V Bonds are registered to DTC or its nominee, if less than all of the Series V Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. See “Book-Entry-Only System.” If the Series V Bonds are no longer registered to DTC or its nominee, the Trustee will select, in such a manner as in the Trustee’s sole discretion it deems appropriate and fair, within each maturity of Series V Bonds to be redeemed, the Series V Bonds or portions of Series V Bonds of such maturity to be redeemed. If the owner of any such Series V Bond fails to present such Series V Bond to the Trustee for payment and exchange, such Series V Bond will, nevertheless, become due and payable on the date fixed for redemption to the extent of the principal amount called for redemption. In case a Series V Bond of a denomination larger than $5,000 is to be redeemed, the principal amount not being redeemed must be in a denomination of $5,000 of any integral multiple thereof. Upon surrender of any Series V Bond for redemption in part only, the University will execute and the Trustee will authenticate and deliver to the registered owner thereof, at the expense of the University, a new Series V Bond or Series V Bonds of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Series V Bond surrendered.

Notice of Redemption. Notice of redemption of the Series V Bonds will be given by the Trustee by mailing a copy of the redemption notice by first-class mail not less than 30 nor more than 45 days prior to the date fixed for redemption to the registered owner of each Series V Bond to be redeemed (such Bondholder being DTC or its nominee for so long as the Series V Bonds are held in book-entry-only form) at the address shown in the registration books. However, failure to give such notice, or any defect therein, with respect to any Series V Bond will not affect the validity of any proceedings for the redemption of other Series V Bonds. If for any reason it is impossible or impractical to mail such notice of call for redemption in the manner described above, then such mailing in lieu thereof as is made at the direction of the University will constitute sufficient notice. On and after the redemption date specified in the notice of redemption, the Series V Bonds or portions thereof called for redemption (provided funds for their redemption are on deposit at the place of payment) will not bear interest, will no longer be protected by the Indenture and will not be deemed to be outstanding under the provisions of the Indenture, and the holders thereof will have the right to receive only the redemption price thereof, plus accrued interest thereon to the date fixed for redemption.

So long as the Series V Bonds are held in book-entry-only form, the Trustee will mail notices of redemption of Series V Bonds only to DTC or its nominee, in accordance with the preceding paragraph. Neither the University nor the Trustee will have any responsibility for any Beneficial Owner’s receipt from DTC or its nominee, or from any DTC Participant or Indirect Participant, of any notices of redemption. See “Book-Entry-Only System.”

Release Concerning Redeemed Series V Bonds. If the amount necessary to redeem any Series V Bonds called for redemption has been deposited with the Trustee for that purpose on or before the date specified for such redemption, and if the notice of redemption has been duly given and all proper charges and expenses of the Trustee in connection with such redemption have been paid or provided for, the University will be released from all liability on such Series V Bonds, and such Series V Bonds will no longer be deemed to be outstanding under the Indenture. Thereafter, such Series V Bonds will not be secured by the lien of the Indenture, and the holders thereof must look only to the Trustee for payment thereof.

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Open Market Purchases. At its option, the University may, at any time not less than 45 days prior to any redemption date designated by the University, (a) deliver to the Trustee Series V Bonds purchased with available moneys of the University and (b) instruct the Trustee to apply the principal amount of such Series V Bonds so delivered for credit at 100% of the principal amount thereof against the principal amount of Series V Bonds of the same series and maturity to be redeemed on such redemption date.

Registration, Transfer and Exchange

The University will cause books for the registration and the transfer and exchange of the Series V Bonds to be kept by the Trustee. The University, the Trustee and any paying agent may deem and treat the person in whose name any Series V Bond is registered as the absolute owner of such Series V Bond (such person being DTC or its nominee, for so long as the Series V Bonds are held in book-entry-only form), for the purpose of receiving payment thereof and for all other purposes whatsoever, and neither the University, the Trustee nor any paying agent will be affected by any notice to the contrary.

The owner of any Series V Bonds (such owner being DTC or its nominee, for so long as the Series V Bonds are held in book-entry-only form) may transfer or exchange such Series V Bonds by surrendering such Series V Bonds at the principal operations office of the Trustee, duly endorsed by, or accompanied by a written instrument or instruments of transfer or exchange in form satisfactory to the Trustee, and duly executed by such Bondholder or such Bondholder’s attorney duly authorized in writing. Upon any such surrender for transfer or exchange, the University will execute, and the Trustee will authenticate and deliver, in the name of the transferee or exchangee, as appropriate, a new Series V Bond or Series V Bonds of the same series and maturity for a like aggregate principal amount or for a like aggregate amount of Series V Bonds of other authorized denominations of the same series and maturity. The Trustee will not be required to transfer or exchange any Series V Bond (i) during the 15 days prior to any Interest Payment Date, (ii) from the date of mailing of notice calling such Series V Bond for redemption or (iii) during a period of 15 days next preceding mailing of a notice of redemption of any Series V Bond. No service charge or payment will be required to be made by the owner of any Series V Bond requesting registration, transfer or exchange of such Series V Bond, but the University and the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge required to be paid with respect to such registration, transfer or exchange. The execution by the University of any Series V Bond of any denomination will constitute full and due authorization of such domination, and the Trustee will thereby be authorized to authenticate and deliver such Series V Bond.

So long as the Series V Bonds are held in book-entry-only form, the Series V Bonds will be registered in the name of DTC or its nominee, and the University and the Trustee will deem and treat DTC or its nominee as the absolute owner of the Series V Bonds for all purposes whatsoever. The Trustee will transfer and exchange Series V Bonds only on behalf of DTC or its nominee, in accordance with the preceding paragraph. Neither the University nor the Trustee will have any responsibility for registering, transferring or exchanging any Beneficial Owners’ interests in the Series V Bonds. See “Book-Entry-Only System.”

Book-Entry-Only System

SO LONG AS CEDE & CO, AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE SERIES V BONDS, REFERENCES IN THIS OFFICIAL STATEMENT TO THE REGISTERED OWNERS (OR THE OWNERS) OF THE SERIES V BONDS ARE TO CEDE & CO. AND NOT TO THE BENEFICIAL OWNERS.

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Series V Bonds. The Series V Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series V Bond certificate will be issued for each maturity of the Series V Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of

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1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company of DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Series V Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series V Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series V Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series V Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series V Bonds, except in the event that use of the book-entry system for the Series V Bonds is discontinued.

To facilitate subsequent transfers, all Series V Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series V Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series V Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series V Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series V Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Series V Bonds, such as defaults and proposed amendments to the security documents. For example, Beneficial Owners of Series V Bonds may wish to ascertain that the nominee holding the Series V Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series V Bonds are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series V Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the University as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series V Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal and interest payments on the Series V Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the University or the Trustee, on

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the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee or the University, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the University or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Series V Bonds at any time by giving reasonable notice to the University or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Series V Bond certificates are required to be printed and delivered.

The University may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series V Bond certificates will be printed and delivered to DTC.

The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the University believes to be reliable, but neither the University nor the Underwriters take any responsibility for the accuracy thereof.

Revision of Book-Entry-Only System. In the event that either (1) the University receives notice from DTC to the effect that DTC is unable or unwilling to discharge its responsibilities as a clearing agency for the Series V Bonds or (2) the University elects to discontinue its use of DTC as a clearing agency for the Series V Bonds, then the University and the Trustee will do or perform or cause to be done or performed all acts or things, not adverse to the rights of the holders of the Series V Bonds, as are necessary or appropriate to discontinue use of DTC as a clearing agency for the Series V Bonds and to transfer the ownership of each of the Series V Bonds to such person or persons, including any other clearing agency, as the holder of such Series V Bonds may direct in accordance with the Indenture. Any expenses of such a discontinuation and transfer, including any expenses of printing new certificates to evidence the Series V Bonds, will be paid by the University.

SOURCES AND USES OF FUNDS

The estimated sources and uses of proceeds of the Series V Bonds is shown below:

Sources of Funds Principal Amount of Series V-1 Bonds $ 60,265,000 Original Issue Premium on Series V-1 Bonds 13,148,642 Principal Amount of Series V-2 Bonds 47,485,000 University Contribution 430,916 Total Sources $121,329,558 Uses of Funds Deposit to refund Refunded Bonds1 $104,100,004 Deposit to refund QES Notes2 2,618,751 New Projects3 13,950,000 Costs of Issuance4 660,803 Total Uses $121,329,558

____________ 1 See “PLAN OF FINANCE—Refunding Program.” 2 See “PLAN OF FINANCE—Qualified Energy Savings Projects—Qualified Energy Savings Notes.” 3 See “PLAN OF FINANCE—Qualified Energy Savings Projects—New Projects.” 4 Including underwriters’ discount, legal fees and expenses, printing expenses, Trustee fees and expenses, and other expenses.

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PLAN OF FINANCE

The Series V Bonds are being issued for the purpose of providing funds to (a) refund certain of the University’s outstanding Bonds more particularly described in Appendix F hereto (the “Refunded Bonds”); (b) finance a portion of the costs of certain qualified energy savings projects; (c) refund the University’s outstanding qualified energy savings notes, the proceeds of which were applied to pay such costs; and (d) pay certain related costs, including costs of issuance.

Refunding Program

The Refunded Bonds consist of those outstanding Indiana University Student Fee Bonds listed in Appendix F. See Appendix F, “SUMMARY OF REFUNDED BONDS.”

A portion of the proceeds of the Series V Bonds will be deposited in escrow funds (the “Escrow Funds”) established pursuant to an Escrow Deposit Agreement dated as of October 15, 2012 (the “Escrow Agreement”), between the University and The Bank of New York Mellon Trust company, N.A., as escrow trustee (the “Escrow Trustee”) and as the Trustee, and will be used to purchase Federal Securities or Escrowed Municipals (as such terms are defined in Appendix C) which, together with the interest thereon and any increment thereto, and an initial cash deposit, will be sufficient to pay when due the principal of and premium, if any, and interest accrued and to accrue on the Refunded Bonds to and including the respective dates on which the Refunded Bonds mature or are to be called for redemption. The Escrow Trustee will apply amounts from time to time on deposit in the Escrow Funds to pay the principal of and premium, if any, and interest on the Refunded Bonds through the respective dates upon which they mature or are to be called for redemption. Upon the deposit of such funds in the Escrow Funds, the Refunded Bonds will be defeased and will no longer be Outstanding under the Indenture and will not have any claim against the Pledged Funds. Neither the maturing principal of the Federal Securities or Escrowed Municipals nor the interest thereon will serve as security for or be available for the payment of principal of or interest on the Series V Bonds. For a description of the verification report to be provided in connection with the refunding of the Refunded Bonds, see “VERIFICATION OF MATHEMATICAL COMPUTATIONS.”

Qualified Energy Savings Projects

New Projects. A portion of the proceeds of the Series V Bonds will be applied to pay, or to reimburse the University for its payment of, a portion of the costs of: (i) a qualified energy savings project on the Indianapolis campus (the “Qualified Energy Savings Project- Indianapolis Campus”); and (ii) a qualified energy savings project on the South Bend campus (the “Qualified Energy Savings Project – South Bend Campus” and, together with the Qualified Energy Savings Project – Indianapolis Campus, the “New Projects”).

Qualified Energy Savings Project - Indianapolis Campus. The primary objective of the project is to reduce energy costs by upgrading and/or replacing select electrical and mechanical systems in several buildings as part of a first phase. Secondary objectives of the project include reduction of maintenance costs of those systems and the decrease of water and sewer expenses. Energy conservation measures are related to the following systems: lighting upgrades; variable frequency drive additions for pumps and fans; building energy management system upgrades; replacement of chilled water coils with higher efficiencies; replacement of domestic water faucets and flush valves for reduced usage; solar photovoltaic installation; and utility meter and account aggregations.

Qualified Energy Savings Project - South Bend Campus. The primary objective of the project is to reduce utility costs of the campus; lower electrical and natural gas bills by upgrading and/or replacing select electrical and mechanical systems in the buildings; lower water and sewer bills by reducing the flow of commodes, urinals and faucets and by adding a cooling tower makeup meter for increased deductions to sewer bills. The secondary objective includes reducing maintenance costs and improving the long term reliability of the electrical and mechanical systems of the campus. The energy conservation measures for this project include: lighting upgrades; variable frequency drive additions for pumps, fans and chillers; building energy management system upgrades; replacement boilers and chillers with higher efficiencies; new transformers; and added power factor correction capacitors.

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Qualified Energy Savings Notes. The Fully Registered Promissory Note dated February 28, 2005 (the “Series 2005 QES Note”), 2007 Indiana University Kokomo Qualified Energy Savings Project Note dated August 17, 2007 (the “Series 2007 QES Note”), and 2008 Indiana University Southeast Qualified Energy Savings Project Note dated June 28, 2008 (the “Series 2008 QES Note” and, together with the Series 2005 QES Note and Series 2007 QES Note, the “QES Notes”), were issued to provide financing of a portion of the costs of certain qualified energy savings projects. The University will apply a portion of the proceeds of the Series V-1 Bonds to pay the principal of and premium, if any, and interest on the Series 2005 QES Note and the Series 2007 QES Note on the date of issuance of the Series V Bonds (the date on which the Series 2005 QES Note and the Series 2007 QES Note will be called for redemption), and to pay the principal of and premium, if any, and interest on the Series 2008 QES Note on December 31, 2012 (the date on which the Series 2008 QES Note will be called for redemption). However, no such proceeds will be pledged to pay the principal of or premium, if any, or interest on any QES Notes, and each QES Note will remain outstanding unless and until the principal of and premium, if any, and interest on such QES Notes are paid in full upon the redemption thereof.

SECURITY FOR SERIES V BONDS

The Series V Bonds are limited obligations of the University, payable solely from and secured exclusively by a pledge of and parity first lien on the Pledged Funds, including: (i) Student Fees; and (ii) to the extent provided in the Indenture, the funds created under the Indenture which are held by the Trustee, except that neither the Series V Bonds nor any currently outstanding Parity Bonds (except the Series I Bonds and Series J Bonds) have any claim on the Reserve Fund or any other reserve fund. Additional Parity Bonds issued in the future may or may not have a claim on the Reserve Fund. Proceeds from the Series V do not constitute Pledged Funds under the Indenture. The Series V Bonds are not a general obligation, debt or liability, or a charge against any property or fund, of the University or the State of Indiana, except to the extent of the pledge of Student Fees and the other Pledged Funds. See Appendix D, “SUMMARY OF CERTAIN PROVISIONS OF INDENTURE.”

The pledge of Student Fees and other Pledged Funds as security for the payment of the Series V Bonds is of equal standing and priority of lien with the pledge of Student Fees and other Pledged Funds (except that neither the Series V Bonds nor any currently outstanding Parity Bonds, except the Series I Bonds and Series J Bonds, have any claim on the Reserve Fund or any other reserve fund) for the following outstanding obligations of the University payable from Student Fees:

Obligations Dated Date Final Maturity 1 Original

Amount Issued

Amount Outstanding as ofOctober 1, 2012 2

Series I July 15, 1992 3 August 1, 2017 $ 45,214,686 $ 16,544,707 Series J March 1, 1993 3 August 1, 2013 113,057,592 2,267,731 Series O March 6, 2003 August 1, 2022 111,490,000 35,325,000 Series P December 14, 2004 August 1, 2026 93,920,000 10,015,000 4 Series Q June 20, 2006 August 1, 2026 32,895,000 5,705,000 4 Series R June 20, 2006 August 1, 2031 129,150,000 59,565,000 4 Series S February 21, 2008 August 1, 2032 88,345,000 72,960,000 Series T April 20, 2010 August 1, 2029 67,400,000 59,550,000 Series U July 26, 2011 August 1, 2031 $94,460,000 92,180,000

TOTAL $ 775,932,278 $ 354,112,438 4

____________ 1 Reflects the date that any outstanding Bonds will mature or be redeemed. 2 Includes accreted value (as of August 1, 2012) of capital appreciation bonds. 3 Dated date for certain capital appreciation bonds issued as a part of these series may be different. 4 Excludes principal amounts of the Refunded Bonds to be refunded and defeased with the proceeds of the Series V Bonds.

See Appendix F, “SUMMARY OF REFUNDED BONDS.”

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Student Fees

“Student Fees” means all academic fees (including tuition), however denominated, assessed by the University against students attending Indiana University, except certain dedicated fees and other fees released from the lien of the Indenture, all as provided in the Indenture. See Appendix A, “INDIANA UNIVERSITY—Fees” and “—Mandatory Fees.”

The University has covenanted and agreed in the Indenture to pay to the Trustee, on or before the fifth day preceding each interest or principal payment date, Student Fees or other available funds in an amount sufficient to pay the principal of and interest due on all outstanding Parity Bonds on such interest or principal payment date. Such amounts will be deposited in the Sinking Fund (as defined in Appendix C). Student Fees, prior to their deposit with the Trustee as required by the Indenture, may be used as general operating funds of the University.

The University has irrevocably pledged Student Fees to the payment of the principal of and premium, if any, and interest on the Bonds. The pledge of Student Fees for the Bonds will constitute a lien on and security interest in Student Fees.

No Reserve Fund

The Series V Bonds will have no claim on the Reserve Fund or any other reserve fund. Moneys on deposit in the Reserve Fund will not be available for the payment of the principal of or premium, if any, or interest on the Series V Bonds. The Reserve Fund is currently available, as needed, solely for the payment of (a) the Series I Bonds and Series J Bonds and (b) any Parity Bonds hereafter issued if so provided in the Supplemental Indenture pursuant to which such Parity Bonds are issued.

Fee Covenant

The University will establish and collect Student Fees so as to generate in each Fiscal Year amounts equal to no less than the sum of:

(a) an amount equal to two times the Annual Debt Service Requirement for all Parity Bonds for such Fiscal Year, provided that if the rate of interest borne by any Variable Rate Bond is fixed for such Fiscal Year at a single rate of interest, such Variable Rate Bond will be treated as a Fixed Rate Bond for purposes of the Annual Debt Service Requirement calculation under this paragraph;

(b) the amount, if any, to be paid into the Reserve Fund or to be paid to the provider of a Reserve Fund Credit Instrument (as defined in Appendix C) with respect to such Fiscal Year; and

(c) any other amounts to be paid from Student Fees with respect to such Fiscal Year in accordance with the Indenture.

The University also covenants to adopt an annual budget for each Fiscal Year which will set forth the estimated Annual Debt Service Requirement, any required deposits to the funds established by the Indenture and any other moneys to be paid from Student Fees in accordance with the Indenture.

Issuance of Additional Bonds

Additional Bonds may be authorized by the Board of Trustees of the University, executed by the University and authenticated by the Trustee and issued under the Indenture from time to time in order to provide funds for any lawful purpose under the Act. Additional Bonds may be categorized as either Parity Bonds or Subordinated Bonds. Parity Bonds means Bonds which are secured as to the payment of principal and interest (other than any Optional Maturities for which a Credit Support Instrument is provided (as such terms are defined in Appendix C)) by a pledge, assignment and grant of a security interest and first lien on the Pledged Funds (except as otherwise provided in regard to the Reserve Fund). Additional Bonds may be issued under the Indenture specifically to evidence

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liability of the University in favor of any entity providing a Credit Support Instrument. Whether such Additional Bonds are Parity Bonds or Subordinated Bonds will depend on the ability of the University, with respect to those Additional Bonds, to meet the “two times” test described below at the time when funds are advanced pursuant to such Credit Support Instrument and not immediately reimbursed by the University. If such test cannot be met, the Additional Bonds will be Subordinated Bonds and the rights of the holders to receive the principal of and interest on such Subordinated Bonds will be subordinated to the holders of all Parity Bonds. “Subordinated Bonds” refers only to Additional Bonds so held by a provider of a Credit Support Instrument. See Appendix D, “SUMMARY OF CERTAIN PROVISIONS OF INDENTURE—Flow of Funds.”

Parity Bonds may be issued from time to time by the University if actual Student Fees received by the University during the preceding Fiscal Year are equal to or greater than two times Maximum Annual Debt Service to become due in the succeeding Fiscal Years for the payment of principal and interest charges on the outstanding Parity Bonds under the Indenture and on the Parity Bonds then to be authenticated and delivered (with interest requirements on Variable Rate Bonds being calculated for this purpose at an assumed per annum rate equal to the then most recently published Bond Buyer Revenue Bond Index (or, if such index is no longer published, any comparable index selected by the University)). In addition, Parity Bonds may be authorized and executed by the University and authenticated and delivered by the Trustee without the necessity for compliance with the above-mentioned test when necessary or appropriate in the opinion of the Trustee to avoid a default under the Indenture.

The University may issue junior lien obligations outside the scope of the Indenture without restriction. These obligations must be junior to the Bonds in all respects. The University has issued junior lien energy savings notes. See Appendix A, “INDIANA UNIVERSITY—Other Indebtedness of the University.”

All computations regarding debt service and Student Fees will be made by the Treasurer of the University.

DEBT SERVICE COVERAGE

The following debt service coverage summary is based on Student Fees for the Fiscal Year ended June 30, 2011, and an estimate of Student Fees for the Fiscal Year ended June 30, 2012, and the Maximum Annual Debt Service on the outstanding Bonds (excluding the Refunded Bonds to be refunded and defeased with the proceeds of the Series V Bonds), including the Series V Bonds.

Year ended June 30

Actual 2011

Estimated 2012

Student Fees (in thousands)1 .................................................... $1,145,260 $1,210,085 Coverage on Maximum Annual Debt Service2 ........................ 20.09 times 21.23 times

____________ 1 See Appendix A “INDIANA UNIVERSITY—Mandatory Fees—Student Fee Revenues.” 2 Maximum Annual Debt Service on the Bonds (excluding the Refunded Bonds to be refunded and defeased with the proceeds of the Series V

Bonds) after the issuance of the Series V Bonds will be $57,010,091 in Fiscal Year 2014 (not reduced by any subsidy payments to be received by the University from the U.S. Treasury for any qualified Build America Bonds). Under the Indenture, the University may issue Parity Bonds if actual Student Fees during the preceding Fiscal Year are at least two times Maximum Annual Debt Service on such Parity Bonds and all other outstanding Parity Bonds. See “SECURITY FOR SERIES V BONDS—Issuance of Additional Bonds” and “ANNUAL DEBT SERVICE REQUIREMENTS.”

ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth, for each respective Fiscal Year ending June 30, the Annual Debt Service Requirements (excluding capitalized interest) for the outstanding Student Fee Bonds and the Series V Bonds payable by the University.

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Fiscal Year Ending

June 30 Outstanding

Debt Service 1, 2

Series V Bonds Total Debt

Service1,2,3 Principal Interest

2013 $ 53,039,224 $ 0 $ 921,599 $ 53,960,823 2014 50,933,314 2,605,000 3,471,776 57,010,091 2015 50,789,227 2,665,000 3,416,613 56,870,840 2016 42,869,949 10,440,000 3,309,137 56,619,086 2017 44,863,113 8,775,000 3,160,890 56,799,002 2018 44,717,621 8,685,000 2,985,649 56,388,270 2019 28,573,812 16,060,000 2,669,906 47,303,718 2020 25,660,238 13,410,000 2,241,022 41,311,260 2021 25,610,257 13,845,000 1,795,613 41,250,870 2022 23,559,054 5,925,000 1,415,125 30,899,179 2023 20,808,045 8,845,000 1,045,875 30,698,920 2024 18,307,117 4,825,000 704,125 23,836,242 2025 18,219,254 5,065,000 456,875 23,741,129 2026 18,143,631 3,220,000 249,750 21,613,381 2027 18,070,945 3,385,000 84,625 21,540,570 2028 11,132,445 0 0 11,132,445 2029 9,687,307 0 0 9,687,307 2030 9,588,172 0 0 9,588,172 2031 4,830,063 0 0 4,830,063 2032 4,824,663 0 0 4,824,663 2033 1,308,800 0 0 1,308,800

TOTAL $525,536,250 $107,750,000 $27,928,580 $661,214,830 1 Excludes debt service on the Refunded Bonds to be refunded and defeased with the proceeds of the Series V Bonds. See Appendix F,

“SUMMARY OF REFUNDED BONDS.” 2 Not reduced by any subsidy payments to be received by the University from the U.S. Treasury for any qualified Build America Bonds. 3 Totals may not sum due to rounding.

CAPITAL PROGRAMS AND ADDITIONAL FINANCING

General

The University has an ongoing capital improvement program consisting of new construction and the renovation of existing facilities. Capital improvement projects have historically been funded from a variety of sources, including but not limited to state appropriations, debt financing, gifts, and University reserve funds. See Appendix A, “INDIANA UNIVERSITY—Capital Programs” and “Other Indebtedness of the University.”

State Appropriations to University

The University receives a major portion of required funding for its educational and research activities from Student Fees, the federal government and the State of Indiana. With respect to the State, the University has annually received, and anticipates continued receipt of, appropriations from the Indiana General Assembly to be applied to the educational and general expenditures of the University, as well as appropriations for capital construction. See Appendix B, “FINANCIAL REPORT OF THE UNIVERSITY FOR THE FISCAL YEAR ENDED JUNE 30, 2011—Management’s Discussion and Analysis.”

Generally, the Indiana General Assembly authorizes certain capital construction projects for the University, payable from Student Fee revenues, under two different arrangements. First, certain projects are designated as eligible for “fee replacement,” meaning that, with respect to the financing of such projects, the General Assembly authorizes the appropriation, on a biennial basis, of an amount equal to the annual debt service requirements due on bonds issued to finance such projects (the “Fee Replacement Appropriations”). Second, certain projects undertaken by the University are expressly authorized by the Indiana General Assembly as not being eligible for such Fee Replacement Appropriations.

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The General Assembly in the past has made Fee Replacement Appropriations to the University in an amount equal to the annual debt service requirements due on all previously outstanding Building Facilities Fee Bonds (refunded in 1985 with the issuance of the University’s Indiana University Student Fee Bonds, Series A), together with debt service due on certain outstanding Bonds. See Appendix A, “INDIANA UNIVERSITY—Budgeting Procedures” and “—State Appropriations to the University.” The University anticipates that Fee Replacement Appropriations will be continued by the Indiana General Assembly in future years, but cannot guarantee or covenant with respect to any such continuation. The Constitution of the State of Indiana prohibits the General Assembly from binding any subsequent General Assembly to continue any Fee Replacement Appropriations.

The qualified energy savings projects to be financed or refinanced out of proceeds of the Series V Bonds, as described above in “PLAN OF FINANCE—Qualified Energy Savings Projects,” are not eligible for Fee Replacement Appropriations. Some (but not all) of the projects previously financed or refinanced with the Outstanding Bonds (including the Refunded Bonds) have been designated by the Indiana General Assembly as eligible for Fee Replacement Appropriations.

All of the Bonds, including the Series V Bonds, are payable solely from and secured exclusively by Student Fees and other Pledged Funds (except that neither the Series V Bonds nor any currently outstanding Bonds, except the Series I Bonds and Series J Bonds, are payable from or secured by the Reserve Fund), irrespective of whether the particular projects financed out of the proceeds of such Bonds are eligible for Fee Replacement Appropriations. Further, none of the Bonds are, or can be under the Constitution and laws of the State, secured by any pledge of Fee Replacement Appropriations.

INDIANA UNIVERSITY

General

The Indiana University system includes eight campuses with core campuses located in Bloomington and Indianapolis, and with other campuses located in Gary, South Bend, Fort Wayne, Kokomo, Richmond and New Albany. Indiana University is fully accredited in all of its departments and divisions by the North Central Association of Colleges and Schools. Each professional school holds full accreditation from its respective professional association. Indiana University is a member of the American Council of Education and the Association of American Universities. See Appendix A, “INDIANA UNIVERSITY.”

Certain Financial and Operating Information

Certain financial information and operating data of the University is included in Appendix A to this Official Statement.

Financial Report

The Financial Report of the University for the fiscal year ended June 30, 2011, is attached as Appendix B to this Official Statement.

The University anticipates that the Financial Report of the University for the fiscal year ended June 30, 2012, will be available in December 2012.

Forward Looking Statements

This Official Statement, and particularly certain information contained under the captions “PLAN OF FINANCE,” “DEBT SERVICE COVERAGE,” “CAPITAL PROGRAMS AND ADDITIONAL FINANCING,” Appendix A, “INDIANA UNIVERSITY—Student Enrollment,” “—Mandatory Fees—Student Budget,” “—Budgeting Procedures” and “—State Appropriations to the University,” and Appendix B, “FINANCIAL REPORT OF THE UNIVERSITY FOR THE FISCAL YEAR ENDED JUNE 30, 2011—Management’s Discussion and Analysis,” contains “forward looking statements” based on current expectations, estimates, forecasts and projections

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about and assumptions made by the University. These forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts” and “seeks” or the negatives of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include demographic changes, demand for higher education services and other services of the University, competition with other higher education institutions and general domestic economic conditions including economic conditions of the State of Indiana. The University disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

TAX MATTERS

In the opinion of Ice Miller LLP, Indianapolis, Indiana, and Coleman Stevenson & Montel, LLP, Indianapolis, Indiana, (together, “Co-Bond Counsel”), under existing laws, regulations, judicial decisions and rulings, interest on the Series V-1 Bonds will be excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date of delivery of the Series V Bonds (the “Code”). Interest on the Series V-2 Bonds is not excluded from gross income for federal tax purposes. The opinion of Co-Bond Counsel is based on certain certifications, covenants and representations of the University and is conditioned on continuing compliance therewith. In the opinion of Co-Bond Counsel, under existing law, interest on the Series V Bonds will be exempt from income taxation in the State of Indiana. This opinion relates only to the exemption of interest on the Series V Bonds for State of Indiana income tax purposes. See Appendix E for the form of Co-Bond Counsel opinions.

The Code imposes certain requirements which must be met subsequent to the issuance of the Series V-1 Bonds as a condition to the exclusion from gross income of interest on the Series V-1 Bonds for federal tax purposes. Noncompliance with such requirements may cause interest on the Series V-1 Bonds to be included in gross income for federal tax purposes retroactive to the date of issue, regardless of the date on which noncompliance occurs. Should the Series V-1 Bonds bear interest that is not excluded from gross income for federal income tax purposes, the market value of the Series V-1 Bonds would be materially and adversely affected.

The University will covenant to not take any action nor fail to take any action, within its power and control, with respect to the Series V-1 Bonds that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Series V-1 Bonds under Section 103 of the Code (collectively, the “Tax Covenants”). The Indenture and certain certificates and agreements to be delivered on the date of delivery of the Series V-1 Bonds establish procedures under which compliance with the requirements of the Code can be met. It is not an event of default under the Indenture if interest on the Series V-1 Bonds is not excludable from gross income for federal income tax purposes or otherwise under any provisions of the Code that is not in effect on the issue date of the Series V-1 Bonds.

The interest on the Series V-1 Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, interest on the Series V-1 Bonds is included in adjusted current earnings in calculating corporate alternative minimum taxable income for purposes of the corporate alternative minimum tax.

The Series V-1 Bonds are not qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code.

Indiana Code 6-5.5 imposes a franchise tax on certain taxpayers (as defined in Indiana Code 6-5.5) which, in general, includes all corporations which are transacting the business of a financial institution in Indiana. The franchise tax is measured in part by interest excluded from gross income under Section 103 of the Code minus associated expenses disallowed under Section 265 of the Code. Taxpayers should consult their own tax advisors regarding the impact of Indiana Code 6-5.5 on their ownership of the Series V Bonds.

The accrual or receipt of interest on the Series V Bonds may affect an owner’s federal or state tax liability in other ways. The nature and extent of these other tax consequences will depend upon the owner’s particular tax status and the owner’s other items of income or deduction. Co-Bond Counsel express no opinion regarding any

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other such tax consequences. Prospective purchasers of the Series V Bonds should consult their own tax advisors with respect to the other tax consequences of owning the Series V Bonds.

The foregoing does not purport to be a comprehensive description of all of the tax consequences of owning the Series V Bonds. Prospective purchasers of the Series V Bonds should consult their own tax advisors with respect to the foregoing and other tax consequences of owning the Series V Bonds.

AMORTIZABLE BOND PREMIUM

The initial offering price of the Series V-1 Bonds is greater than the principal amount payable at maturity. As a result, the Series V-1 Bonds will be considered to be issued with amortizable bond premium (the “Bond Premium”). An owner who acquires a Series V-1 Bond in the initial offering will be required to adjust the owner’s basis in the Series V-1 Bond downward as a result of the amortization of the Bond Premium, pursuant to Section 1016(a)(5) of the Code. Such adjusted tax basis will be used to determine taxable gain or loss upon the disposition of the Series V-1 Bonds (including sale, redemption or payment at maturity). The amount of amortizable Bond Premium will be computed on the basis of the taxpayer’s yield to maturity, with compounding at the end of each accrual period. Rules for determining (i) the amount of amortizable Bond Premium and (ii) the amount amortizable in a particular year are set forth at Section 171(b) of the Code. No income tax deduction for the amount of amortizable Bond Premium will be allowed pursuant to Section 171(a)(2) of the Code, but amortization of Bond Premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining other tax consequences of owning the Series V-1 Bonds. Owners of Series V-1 Bonds should consult their tax advisors with respect to the precise determination for federal income tax purposes of the treatment of Bond Premium upon the sale or other disposition of such Series V-1 Bonds and with respect to the state and local tax consequences of owning and disposing of Series V-1 Bonds.

Special rules governing the treatment of Bond Premium, which are applicable to dealers in tax-exempt securities, are found at Section 75 of the Code. Dealers in tax-exempt securities are urged to consult their own tax advisors concerning the treatment of Bond Premium.

ENFORCEABILITY OF RIGHTS AND REMEDIES

The enforceability of rights and remedies of the Trustee or the holders of the Series V Bonds under the Indenture, and the availability of remedies to any party seeking to enforce the pledge of the Pledged Funds, including Student Fees, are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (the federal bankruptcy code), the rights and remedies provided in the Indenture and any other agreement in this financing, and the rights and remedies of any party seeking to enforce the pledge of the Pledged Funds, including Student Fees, may not be readily available or may be limited.

The various legal opinions to be delivered concurrently with the delivery of the Series V Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by the valid exercise of the constitutional powers of the State of Indiana and the United States of America and bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The exceptions would encompass any exercise of federal, State or local police powers (including the police powers of the University and the State), in a manner consistent with the public health and welfare. Enforceability of the Indenture, and availability of remedies to a party seeking to enforce the pledge of the Pledged Funds, including Student Fees, in a situation where such enforcement or availability may adversely affect public health and welfare, may be subject to these police powers.

LITIGATION

At the time of delivery of the Series V Bonds, the University will certify that there is no litigation or other proceeding pending or, to the University’s knowledge, threatened, in any court, agency or other administrative body (i) restraining or contesting the issuance of the Series V Bonds or the pledging of the Pledged Funds, including the

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Student Fees, (ii) in any way affecting the validity of any provision of the Series V Bonds, the Resolutions or the Indenture, or (iii) except as may be disclosed in the audited financial statements of the University for the fiscal year ended June 30, 2011, attached as Appendix B hereto, that would have a material adverse impact on the University’s financial condition or ability to pay the principal of and the interest on the Series V Bonds.

RATINGS

Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Credit Market Services (“Standard & Poor’s”) have assigned long term ratings of “Aaa” and “AA+”, respectively, to the Series V Bonds. These ratings reflect only the views of Moody’s and Standard & Poor’s, and an explanation of such ratings may be obtained from Moody’s at Moody’s Investors Service, Inc., Public Finance—Higher Education, 7 World Trade Center at 250 Greenwich Street, 23rd Floor, New York, New York 10007, and from Standard & Poor’s at Standard & Poor’s Ratings, Public Finance, Higher Education Group, 55 Water Street, 38th Floor, New York, New York 10041-0003. The ratings are not a recommendation to buy, sell or hold the Series V Bonds. There is no assurance that any rating will remain in effect for any given period of time or that it will not be revised downward or withdrawn entirely by Moody’s or Standard & Poor’s if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of a rating may have an adverse effect on the market price or marketability of the Series V Bonds.

CERTAIN LEGAL MATTERS

Certain legal matters incidental to the authorization and issuance of the Series V Bonds are subject to the approval of Ice Miller LLP, Indianapolis, Indiana, and Coleman Stevenson & Montel, LLP, Indianapolis, Indiana, Co-Bond Counsel. The form of approving opinions of Co-Bond Counsel with respect to the Series V Bonds is attached hereto as Appendix E. Certain legal matters will be passed upon for the University by Jacqueline A. Simmons, Esquire, Bloomington, Indiana, Vice President and General Counsel to the University, and for the Underwriters by Barnes & Thornburg LLP, Indianapolis, Indiana.

Co-Bond Counsel have not undertaken independently to verify any information contained in this Official Statement, except that representatives of such firms participating in the issuance of the Series V Bonds have reviewed the information under the headings “INTRODUCTION,” “DESCRIPTION OF SERIES V BONDS” (except for the information provided in “Book-Entry-Only System”), “SECURITY FOR SERIES V BONDS,” “TAX MATTERS,” “AMORTIZABLE BOND PREMIUM” and Appendices C, D, E and F and determined that such information conforms in all material respects to the provisions of the documents and other matters set forth therein. Co-Bond Counsel have not undertaken to review the accuracy or completeness of statements under any other heading of this Official Statement, including particularly matters related to the financial condition of the University and other financial data concerning the University, and expresses no opinion thereon or assumes any responsibility therewith.

UNDERWRITING

The underwriters named on the cover page of this Official Statement (the “Underwriters”) have jointly and severally agreed to purchase the Series V Bonds from the University at an aggregate underwriter’s discount of $428,140.07 from the initial public offering prices set forth or reflected on the inside cover page of this Official Statement. J.P. Morgan Securities LLC has acted as representative of the Underwriters. The obligations of the Underwriters to purchase the Series V Bonds are subject to certain conditions precedent to closing, and the Underwriters will be obligated to purchase all of the Series V Bonds if any Series V Bonds are purchased. The Underwriters have agreed to make a bona fide public offering of all the Series V Bonds at prices not in excess of the initial public offering prices set forth or reflected on the inside cover page of this Official Statement. The Series V Bonds may be offered and sold to certain dealers (including the Underwriters and other dealers depositing such Series V Bonds into investment trusts) at prices lower than such public offering prices and, after completion of the initial bona fide public offering, such public offering prices may be changed, from time to time, by the Underwriters.

J.P. Morgan Securities LLC (“JPMS”), one of the Underwriters of the Series V Bonds, has entered into negotiated dealer agreements (each, a “Dealer Agreement”) with each of UBS Financial Services Inc. (“UBSFS”) and Charles Schwab & Co., Inc. (“CS&Co.”) for the retail distribution of certain securities offerings, including the Series V Bonds, at the original issue prices. Pursuant to each Dealer Agreement, each of UBSFS and CS&Co. will

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purchase Series V Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any Series V Bonds that such firm sells.

Goldman, Sachs & Co. (“Goldman Sachs”), one of the Underwriters of the Series V Bonds, has entered into a master dealer agreement (the “Master Dealer Agreement”) with Incapital LLC (“Incapital”) for the distribution of certain municipal securities offerings, including the Series V Bonds, to Incapital’s retail distribution network at the initial public offering prices. Pursuant to the Master Dealer Agreement, Incapital will purchase Series V Bonds from Goldman Sachs at the initial public offering price less a negotiated portion of the selling concession applicable to any Series V Bonds that Incapital sells.

The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. The Underwriters may in the future provide a variety of these services to the University and to persons and entities with relationships with the University, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriters and their respective officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the University (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the University. The Underwriters may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

VERIFICATION OF MATHEMATICAL COMPUTATIONS

Robert Thomas CPA, LLC, will deliver to the University its report indicating that it has examined, in accordance with standards established by the American Institute of Certified Public Accountants, the information and assertions provided by the University, the Underwriters and their representatives. Included in the scope of its examination will be a verification of the mathematical accuracy of (a) the mathematical computations of the adequacy of the cash and the maturing principal of, and interest on, securities deposited in the Escrow Funds to pay, when due, the maturing principal and called principal of and redemption premium, if any, and interest on the Refunded Bonds; and (b) the mathematical computations supporting the conclusion of Co-Bond Counsel that the Series V Bonds are not “arbitrage bonds” under the Code and the regulations promulgated thereunder.

CONTINUING DISCLOSURE

General

Pursuant to continuing disclosure requirements promulgated by the Securities and Exchange Commission (the “SEC”) in SEC Rule 15c2-12, as amended (the “Rule”), the University will enter into a Continuing Disclosure Supplement dated as of October 15, 2012, to an Amended and Restated Continuing Disclosure Undertaking Agreement of the University dated as of March 1, 2011, as previously supplemented (collectively, the “Continuing Disclosure Agreement”). The Underwriters, by their agreement to purchase the Series V Bonds, (a) accept and assent to the Continuing Disclosure Agreement and (b) assign all their rights under the Continuing Disclosure Agreement, as promisee, to the holders of the Series V Bonds. Any beneficial owner of any Series V Bond will, by its payment for and acceptance of such Series V Bond, be deemed to have accepted and assented to the Continuing Disclosure Agreement and the exchange of (i) such payment and acceptance for (ii) the promises of University contained therein.

Pursuant to the terms of the Continuing Disclosure Agreement, the University will agree to provide the following information while any of the Series V Bonds are outstanding:

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(i) To the Municipal Securities Rulemaking Board (“MSRB”), when and if available, the audited financial statements of the University for each fiscal year of the University, beginning with the fiscal year ending June 30, 2012, together with the auditor’s report and all notes thereto.

(ii) To the MSRB, within 180 days of the close of each fiscal year of the University, beginning with the fiscal year ending June 30, 2012, annual financial information of the University for such fiscal year (other than the audited financial statements described above), including: (a) unaudited financial statements of the University if audited financial statements are not then available and (b) operating data (excluding any demographic information or forecasts) of the general type included in Appendix A to this Official Statement (the “Annual Information”).

(iii) In a timely manner within 10 business days after the occurrence thereof, to the MSRB, notice at the occurrence of any of the following events with respect to the Series V Bonds:

(a) principal and interest payment delinquencies;

(b) non-payment related defaults, if material;

(c) unscheduled draws on debt service reserves reflecting financial difficulties;

(d) unscheduled draws on credit enhancements reflecting financial difficulties;

(e) substitution of credit or liquidity providers, or their failure to perform;

(f) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Series V Bonds, or other material events affecting the tax status of the Series V Bonds;

(g) modifications to the rights of owners of the Series V Bonds, if material;

(h) Series V Bond calls, if material, and tender offers;

(i) defeasances of the Series V Bonds;

(j) release, substitution or sale of property securing repayment of the Series V Bonds, if material;

(k) rating changes;

(l) bankruptcy, insolvency, receivership or similar event of the University;

(m) the consummation of a merger, consolidation or acquisition involving the University or the sale of all or substantially all of the assets of the University, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; or

(n) appointment of a successor or additional trustee or the change of name of a trustee, if material.

Determination of materiality will be made by the University in accordance with the standards established by federal securities laws, as then in existence.

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(iv) In a timely manner, to the MSRB, notice of the University’s failure to provide the Annual Information as required by the Continuing Disclosure Agreement.

If any Annual Information or audited financial statements relating to the University referred to above no longer can be provided because the operations to which they relate have been materially changed or discontinued, a statement to that effect, provided by the University to the MSRB, along with any other Annual Information or audited financial statements required to be provided under the Continuing Disclosure Agreement, will satisfy the Continuing Disclosure Agreement. To the extent available, the University will cause to be filed, along with the other Annual Information or audited financial statements, operating data similar to that which was previously provided.

The University has agreed to make a good faith effort to obtain Annual Information. However, failure to provide any component of Annual Information, because it is not available to the University on the date by which Annual Information is required to be provided under the Continuing Disclosure Agreement, will not be deemed to be a breach of the Continuing Disclosure Agreement. The University has further agreed to supplement the Annual Information filing when such data is available.

Dissemination Agent

The University may, at its sole discretion, utilize an agent (a “Dissemination Agent”) in connection with the dissemination of any Annual Information or other information required to be provided by the University pursuant to the Rule or the Continuing Disclosure Agreement.

Remedy

The sole remedy against the University for any failure to carry out any provision of the Continuing Disclosure Agreement will be to require specific performance of the University’s disclosure obligations under the Continuing Disclosure Agreement, without money damages of any kind or in any amount or any other remedy. Any failure of the University to honor its covenants under the Continuing Disclosure Agreement will not constitute a breach of or default under the Series V Bonds, the Indenture or any other agreement to which the University is a party.

In the event the University fails to provide any information required to be provided by the Continuing Disclosure Agreement, any beneficial owner of Series V Bonds may pursue the remedy set forth above in any court of competent jurisdiction in the State. Any challenge to the adequacy of the information provided by the University by the terms of the Continuing Disclosure Agreement may be pursued only by beneficial owners of not less than 25% in principal amount of Series V Bonds then outstanding in any court of competent jurisdiction in the State. An affidavit to the effect that such persons are beneficial owners of Series V Bonds, supported by reasonable documentation of such claim, will be sufficient to evidence standing to pursue the remedy set forth above.

If specific performance is granted by any such court, the party seeking such remedy will be entitled to payment of costs by the University and to reimbursement by the University of reasonable fees and expenses of attorneys incurred in the pursuit of such claim. If specific performance is not granted by any such court, the University will be entitled to payment of costs by the party seeking such remedy and to reimbursement by such party of reasonable fees and expenses of attorneys incurred in the pursuit of such claim.

Prior to pursuing any remedy for any breach of any obligation under the Continuing Disclosure Agreement, a beneficial owner of Series V Bonds must give notice to the University, by registered or certified mail, of such breach and its intent to pursue such remedy. Fifteen days after the receipt of such notice, or upon earlier response from the University to this notice indicating continuing noncompliance, such remedy may be pursued under the Continuing Disclosure Agreement if and to the extent the University has failed to cure such breach.

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Modification of Continuing Disclosure Agreement

The University may, from time to time, amend or modify the Continuing Disclosure Agreement without the consent of or notice to the Underwriters or Bondholders, if either (a)(i) such amendment or modification is made in connection with a change in circumstances that arises from a change in legal requirements, change in law or change in the identity, nature or status of the University, or type of business conducted, (ii) the Continuing Disclosure Agreement, as so amended or modified, would have complied with the requirements of the Rule on the date of the Continuing Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (iii) such amendment or modification does not materially impair the interests of the holders of the obligations subject to the Continuing Disclosure Agreement, as determined either by (A) any person selected by the University that is unaffiliated with the University (including the trustee under the applicable indenture, or nationally recognized bond counsel) or (B) an approving vote of the holders of the requisite percentage of outstanding obligations of a series subject to the Continuing Disclosure Agreement at the time of such amendment or modification; or (b) such amendment or modification (including an amendment or modification which rescinds the Continuing Disclosure Agreement) is permitted by the Rule, as then in effect.

MISCELLANEOUS

During the initial offering period for the Series V Bonds, copies of the Indenture, the Escrow Agreement, the Continuing Disclosure Agreement and the Resolutions will be available for inspection at the Office of the Treasurer of Indiana University, Bryan Hall 114, Bloomington, Indiana 47405.

The execution and delivery of this Official Statement has been duly authorized by the Board of Trustees of the University.

This Official Statement is submitted in connection with the issuance and sale of the Series V Bonds and may not be reproduced or used, in whole or in part, for any other purpose.

Any statements in this Official Statement involving matters of opinion, projections or estimates, whether or not expressly so stated, are intended as such and not as representations of fact. No representation is made that any such statement will be realized. The agreements of the University are fully set forth in the Indenture in accordance with the Act. Neither any advertisement of the Series V Bonds nor this Official Statement is to be construed as constituting a contract or agreement between the University and the purchasers or owners of the Series V Bonds.

THE TRUSTEES OF INDIANA UNIVERSITY By: /s/ MaryFrances McCourt Treasurer

APPENDIX A

INDIANA UNIVERSITY

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APPENDIX A

INDIANA UNIVERSITY

General

Indiana University (the “University” or “IU”) is one of the largest universities in the nation. It was established by the Indiana General Assembly (the “General Assembly”) in 1820 as Indiana Seminary and was located in Bloomington. It was designated as Indiana College by the General Assembly in 1828 and became Indiana University in 1838.

The University is composed of eight campuses, with core campuses in Bloomington and Indianapolis and regional campuses serving other areas of Indiana located in Gary (“Northwest”), Fort Wayne (Indiana University Purdue University Fort Wayne) (“Fort Wayne”), Kokomo (“Kokomo”), New Albany (“Southeast”), Richmond (“East”), and South Bend (“South Bend”). The Bloomington campus is the oldest and largest campus in the University system, occupying 1,926 acres, and is the primary residential campus. The Indiana University Purdue University at Indianapolis campus (“IUPUI”) is the home of the Indiana University School of Medicine, the School of Dentistry, and the School of Nursing. The eight campuses of the University encompass a total of 3,609 acres. Indiana University and Purdue University (“Purdue”) jointly offer academic programs at IUPUI and Fort Wayne. The University has fiscal responsibilities for IUPUI, and Purdue has fiscal responsibilities for Fort Wayne.

Forward Looking Statements

Certain information contained in this document, particularly that titled “Student Enrollment,” “Mandatory Fees - Student Budget,” “Operating Budget and Related Procedures,” “State Appropriations to the University,” and “Capital Program” and under the financial report accompanying this document —“Management Discussion and Analysis”, contains “forward looking statements” based on current expectations, estimates, forecasts and projections about and assumptions made by the University. These forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” and “seeks” or the negatives of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include demographic changes, demand for higher education services and other services of the University, competition with other higher education institutions and general domestic economic conditions including economic conditions of the state of Indiana (the “State”). The University disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Academic Schools, Colleges & Divisions of the University

The University divides the academic year into two academic semesters and additional summer terms varying in length by campus. The University offers courses in the arts, humanities, social, behavioral, physical and life sciences, and professional fields. Additional programs include military science, professional practice, IU Online, and special summer session programs. The major areas and fields of study at the University’s campuses are organized into specific schools, colleges and divisions.

The major areas and fields of study at the Bloomington and IUPUI campuses are organized as follows: College of Arts and Sciences; Kelley School of Business; School of Dentistry; School of Education; School of Engineering and Technology (Purdue); Henry Radford Hope School of Fine Arts; Graduate School; School of Health and Rehabilitation Sciences; School of Public Health-Bloomington; Herron School of Art and Design; Honors College; Hutton Honors College; School of Informatics; School of Informatics and Computing; School of Journalism; Maurer School of Law; Richard M. Fairbanks School of Public Health; Robert H. McKinney School of Law; School of Liberal Arts; School of Library and Information Science; School of Medicine; Jacobs School of Music; School of Nursing; School of Optometry; School of Physical Education and Tourism Management; School of Public and Environmental Affairs; School of Science (Purdue); School of Social Work; University College;

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University Division; and University Graduate School. The School of Engineering and Technology (Purdue) and the School of Science (Purdue) include programs that are the academic responsibility of Purdue.

The major areas and fields of study at the regional campuses are organized as follows:

East - School of Business and Economics; School of Education; School of Humanities and Social Sciences; School of Natural Science and Mathematics; School of Nursing; College of Technology (Purdue); and School of Social Work.

Kokomo - Division of Allied Health Sciences; School of Arts and Sciences; School of Business; Division of Education; School of Nursing; School of Public and Environmental Affairs; and College of Technology (Purdue).

Northwest - College of Arts and Sciences; School of Business and Economics; School of Education; College of Health and Human Services; Division of Labor Studies; School of Nursing; School of Public and Environmental Affairs; and Division of Social Work.

South Bend – Ernestine M. Raclin School of the Arts; Judd Leighton School of Business and Economics; School of Education; College of Health Sciences; Division of Labor Studies; College of Liberal Arts and Sciences; School of Nursing; School of Social Work; and College of Technology (Purdue).

Southeast - School of Arts and Letters; School of Business; School of Education; School of Natural Sciences; School of Nursing; and School of Social Sciences.

Authorized Degree Programs and Degrees Conferred

For the 2010-11 academic year, 943 Indiana University degree programs and 107 Purdue University degree programs were authorized and implemented on the University’s campuses. Four-year programs leading to baccalaureate degrees constitute the largest single category, accounting for 496 programs. Advanced degrees (professional, master's and master's degree equivalents and doctoral) account for 399 programs. Associate degrees account for 155 programs. As of fall 2012, for the 2011-12 and 2012-13 academic years, degree program information is not available.

The University's total headcount enrollment for the fall semester of 2012 was 110,393 students. During the academic year ended June 30, 2011, the University awarded a total of 20,049 degrees consisting of 13,093 bachelor’s degrees, 4,736 master's degrees, 1,444 professional and doctoral degrees, and 776 associate degrees. As of the fall semester of 2011, the University's full time faculty totaled 5,040 for all campuses.

Accreditations and Memberships

The University is fully accredited in all of its departments and divisions by the Higher Learning Commission of the North Central Association of Colleges and Schools. Each professional school holds full accreditation from its respective professional association. The University is a member of the American Council of Education and the Association of American Universities.

The Board of Trustees of the University

The University is governed by a nine-member Board of Trustees, which under Indiana statutes has policy and decision-making authority to carry out the programs and missions of the University. Five of the members of the Board of Trustees are appointed by the Governor for three year terms; three trustees are elected by the alumni of the University for three year terms, with one alumnus trustee being elected each year; and one trustee position must be a full-time student of the University. The student trustee is appointed by the Governor for a two year term. Certain officers of the Board of Trustees are not members. The current members and officers of the Board of Trustees are listed below:

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BOARD OF TRUSTEE MEMBERS

William R. Cast, M.D., Chair (Allen County)

NoMoreClipboard CEO

Patrick A. Shoulders, Vice Chair (Vanderburgh County)

Ziemer, Stayman, Weitzel & Shoulders Attorney/Partner

MaryEllen Kiley Bishop (Hamilton County) Bruce Cole (Fairfax County, Virginia) Philip N. Eskew, Jr., M.D. (Kosciusko County)

Cohen, Garelick and Glazier Attorney/Partner The Ethics and Public Policy Center Senior Fellow Indiana University Distinguished Professor Emeritus St. Vincent Hospital Director, Physician and Patient Relations (Retired), and Clinical Professor, Obstetrics & Gynecology, Indiana University School of Medicine

Cora J. Griffin (Cass County) Thomas E. Reilly Jr. (Marion County)

Indiana University-Purdue University Indianapolis School of Public and Environmental Affairs Student American Chemistry Council President and CEO (Retired) Reilly Industries, Inc. President and Chairman of the Board (Retired)

Derica W. Rice (Hamilton County)

Eli Lilly and Company Executive Vice President for Global Services and Chief Financial Officer

William H. Strong (Hong Kong)

Morgan Stanley Co-CEO Asia Pacific

BOARD OF TRUSTEE OFFICERS

William R. Cast, M.D., Chair (Allen County)

NoMoreClipboard CEO

Patrick A. Shoulders, Vice Chair (Vanderburgh County)

Ziemer, Stayman, Weitzel & Shoulders Attorney/Partner

MaryFrances McCourt Treasurer of the Trustees

Stewart T. Cobine Assistant Treasurer of the Trustees

Robin Roy Gress Secretary of the Trustees

Jacqueline A. Simmons Assistant Secretary of the Trustees

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Administrative Officers of the University

As the chief executive of the University, the President is appointed by the Board of Trustees (the “Trustees”) and is responsible for the operation of the entire University within the framework of policies provided by the Trustees. The President is responsible for accomplishing the objectives of the University, for determining missions and priorities for its various units, and for the effective and efficient planning, use, and management of its resources. The following is a list of the major officers of the University. Brief biographical sketches of certain officers follow.

Michael A. McRobbie, President

John S. Applegate, Executive Vice President for University Regional Affairs, Planning and Policy

Charles R. Bantz, Executive Vice President and Chancellor, Indiana University-Purdue University Indianapolis

D. Craig Brater, Vice President for University Clinical Affairs

G. Frederick Glass, Vice President and Director of Intercollegiate Athletics

Jorge V. José, Vice President for Research

Edwin C. Marshall, Vice President for Diversity, Equity and Multicultural Affairs

Thomas A. Morrison, Vice President for Capital Planning and Facilities

Lauren Robel, Executive Vice President and Provost, Indiana University Bloomington

Neil D. Theobald, Senior Vice President and Chief Financial Officer (through December 31, 2012)

Michael M. Sample, Vice President for Public Affairs and Government Relations

Jacqueline A. Simmons, Vice President and General Counsel

William B. Stephan, Vice President for Engagement

Bradley C. Wheeler, Vice President for Information Technology and Chief Information Officer

David Zaret, Vice President for International Affairs

Susan Sciame-Giesecke, Interim Chancellor of Indiana University Kokomo (until a permanent chancellor is appointed)

William J. Lowe, Chancellor of Indiana University Northwest

Sandra R. Patterson-Randles, Chancellor of Indiana University Southeast

Laurence Richards, Interim Chancellor of Indiana University East (through June 30, 2013)

Una Mae Reck, Chancellor of Indiana University South Bend (through June 30, 2013)

Vicky L. Carwein, Chancellor of Indiana University-Purdue University Fort Wayne

Adam W. Herbert, President Emeritus of the University

Thomas Ehrlich, President Emeritus of the University

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MICHAEL A. MCROBBIE – President. Michael A. McRobbie took office as the 18th president of the University on July 1, 2007. From the beginning of his tenure as president, McRobbie has focused on the University’s fundamental missions of excellence in research and teaching to be achieved through a great faculty, responsive and relevant education, an enhanced global presence, expanded infrastructure, a rededication to the arts and humanities, and new economic development and engagement initiatives. McRobbie joined the University in 1997 as Vice President for Information Technology and Chief Information Officer. In 2003, he assumed the additional position of Vice President for Research, and three years later the Trustees appointed him Interim Provost and Vice President for Academic Affairs. McRobbie holds professorships in computer science, informatics, and philosophy, and adjunct professorships in cognitive science and information science at the Bloomington campus. He is also a professor of computer technology at the School of Engineering and Technology (Purdue) at the IUPUI campus. A member of many national and international industrial, governmental, and scientific boards and committees, McRobbie was a co-founder of the high-performance broadband Asia Pacific Advanced Network, which supports the research and education community all across the Asia-Pacific region. A native of Australia who became a U.S. citizen in 2010, he earned a Bachelor of Arts degree from the University of Queensland and a Doctoral degree at the Australian National University. He has also received honorary degrees from the Australian National University, the University of Queensland, and Sungkyunkwan University in Seoul, South Korea. Additionally, he has been elected an honorary member of the Australian Academy of Humanities and appointed as an Officer in the General Division of the Order of Australia, one of that nation’s highest honors.

NEIL THEOBALD –Senior Vice President and Chief Financial Officer, Through December 31, 2012. On January 1, 2013, Theobald will become President of Temple University. Prior to his appointment as Vice President & Chief Financial Officer and subsequently Senior Vice President and Chief Financial Officer, Theobald was the University’s Bloomington campus Vice Chancellor for Budgetary Administration and Planning from 2002-06 and Senior Vice Provost, with continued responsibility for finance and administration, in 2006-07. Theobald received his B.A. in Economics from Trinity College (CT) in 1978 and worked as a corporate executive for two Fortune 500 companies before completing his Ph.D. at the University of Washington in 1988. He was awarded the Flanigan Prize for the outstanding dissertation in the field by the American Educational Finance Association. In addition to serving as President of the American Education Finance Association in 2000-01, Theobald has been a tenured faculty member at the University of Washington and a visiting professor at the University of Edinburgh (Scotland). He continues to be a Professor of Educational Finance on the Bloomington campus.

MARYFRANCES MCCOURT – Treasurer. MaryFrances McCourt began as Treasurer of the University and Treasurer of the Trustees in October 2005 and is responsible for the management of operating funds, debt, the University’s banking and treasury operations, risk management, auxiliary accounting, accounts receivable, student loan administration, capital assets and the Bloomington Bursar functions. Before joining the staff of Indiana University, McCourt was Assistant Treasurer for a multi-billion dollar distributor and premier reseller of enterprise computer technology solutions headquartered in Cleveland, Ohio. She has held various positions in strategic planning; financial analysis and treasury management with particular focus on operational efficiency; business planning (including acquisitions, divestitures and new business modeling); customer, vendor and product line profitability analyses; and balance sheet management. McCourt graduated with a B.A. in Economics from Duke University and an M.B.A. from Case Western University.

Facilities

Square Footage There are 859 buildings on all campuses of the University encompassing 34.5 million gross square feet, of which approximately 21.3 million square feet is assignable to operating units.

Libraries The University’s Library System serves all campuses with separate collections as well as interlibrary loan programs. As of June 30, 2012, the library system holdings include 12.3 million volumes. The University’s libraries are open to residents of the State as well as University faculty and staff.

The Lilly Library on the Bloomington campus houses the University’s collections of rare books and manuscripts. Its holdings number more than 400,000 books, over 7,500,000 manuscripts and 140,000 pieces of sheet music.

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Information Technology Services University Information Technology Services (“UITS”) is responsible for the continued development of a high-performance computing and communications infrastructure and the information technology environment that contains tools and services that support the University’s academic, research, and administrative work, including a high-speed campus network with wireless access; central web hosting; tools and support for instruction and research; supercomputers for data analysis and visualization; more than 1,300 virtual servers in the state-of-the-art, disaster-resistant Data Center; and hundreds of public-access, Internet-connected workstations. Interconnecting these resources is a high-speed statewide fiber optic network connecting all University campuses. The network is connected to national and international research and education networks, such as the Internet2. UITS has offices at IU Bloomington, IUPUI, IUPU Columbus, IU East, IU Kokomo, IU South Bend, and IU Southeast, and employs more than 800 highly trained professionals to support and expand the University’s information technology capabilities. UITS is composed of six divisions: Research Technologies; Learning Technologies; Client Services and Support; Enterprise Software; Networks; and Enterprise Infrastructure; all working together to support the University community in its use of information technology. UITS reports to the Office of the Vice President for Information Technology and Chief Information Officer, which provides leadership for the continued development of information technology at IU.

Research As of fall 2011, the University, excluding the Fort Wayne Campus, has approximately 1,190,902 assignable square feet of laboratories and service areas used for research purposes, primarily on the Bloomington and IUPUI campuses. The nature and function of this research space ranges from highly specialized to broad multi-disciplinary uses, with an emphasis on life and medical sciences.

Housing Facilities All undergraduate first-year students on the Bloomington campus are required to live

in on–campus housing facilities, which include residence halls, on-campus apartments, and fraternity and sorority houses. As of fall 2012, the Bloomington campus provided residence hall/dormitory housing for 10,876 students and apartment housing for 1,492 students. Occupancy in Bloomington campus residence halls was 98% and in apartment housing was 96%. Living quarters for 450 additional students on the Bloomington campus are currently being constructed and anticipated to be available in the 2013-14 academic year. On the Bloomington campus, as of spring 2012, approximately 6,206 students participated in fraternity/sorority life in 40 fraternities and 31 sororities, with 19 fraternities and 19 sororities providing on-campus housing. As of fall 2012, the residence facilities on the IUPUI campus provided living quarters for 1,136 students, through a combination of apartment style housing, traditional co-ed residence halls, and townhouse units. Occupancy in IUPUI campus housing was 100%. Living quarters for 560 additional students on the IUPUI campus are anticipated to be available in the 2013-14 academic year by converting the on-campus hotel and conference center into student housing, residential and campus dining, and additional classroom space. In the summer of 2008, construction was completed on new housing facilities on the South Bend and the Southeast campuses. These facilities can provide living quarters for approximately 400 students on each campus. Housing occupancy on the South Bend and Southeast campuses for the fall of 2012 were 82% and 97%, respectively. Living quarters for 87 additional students on the Southeast campus are currently being constructed and anticipated to be available in the 2013-14 academic year. The housing facilities on the South Bend and Southeast campuses and a portion of the living quarters provided on the Bloomington campus are not included as facilities under the student residence system indenture because they were financed under the Consolidated Revenue Bonds (“CRB”) Indenture. Other regional campuses for which the University has fiscal responsibilities have no student residence facilities currently.

Parking Facilities Parking space is provided for faculty, staff, students and visitors on all University campuses. Use of all parking areas and parking facilities is generally limited to paid permit holders, except for those garages and surface lots provided for visitors that are controlled by daily parking rates. Parking is available at sixteen garages on four campuses and at various surface lots on all University campuses.

Other Facilities Some of the University's other facilities include observatories; television, radio and journalism facilities; theatre and performance facilities; fine art studios; extensive science and medical teaching laboratories; museums of art and archaeology; printmaking facilities; and Bradford Woods – a 2,500 acre outdoor educational facility and nature preserve.

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Faculty and Staff

The University’s full-time academic administrators, faculty and lecturers consisted of 5,040 persons (including visiting faculty but excluding librarians), as of the fall semester of 2011. The percentage of faculty at the University’s Bloomington and IUPUI campuses that have tenure are 74% and 66%, respectively (based upon the number of faculty and administrators with the rank of instructor or above who are eligible for tenure, but excluding librarians).

As of the fall semester of 2011, 88% of Bloomington campus faculty (including visiting faculty) and academic administrators with professional rank hold a doctoral or professional degree. This percentage is 91% at IUPUI and 89% at the other campuses.

The number of full-time administrators and staff employed by the University totaled 12,042 as of fall 2011. The University has recognized four employee unions: (1) American Federation of State, County and Municipal Employees (AFSCME) Service Staff, for certain custodian, craft, maintenance and food service personnel; (2) AFSCME Police for certain police officers; (3) Communications Workers of America (CWA) for certain clerical, technical, and support personnel; and (4) International Alliance of Theatrical Stage Employees (IATSE) Stagehands for certain staff and hourly personnel. University administration meets and confers with each union about specific working conditions under the framework of “Conditions for Cooperation,” a policy statement adopted by the Board of Trustees, but does not negotiate collective bargaining agreements. As an instrumentality of the state of Indiana, the University and its employees are not subject to the provisions of the National Labor Relations Act, as amended, but are governed by state law, which prohibits strikes by public employees. Each union’s status as exclusive representative of certain University employees is conditioned upon their disavowal of the right to strike in accordance with such law and Board of Trustees policy.

Student Admissions

The University attracts students from a variety of backgrounds and geographic locations, with representation from 49 states, Washington D.C., and 163 foreign countries, as of fall 2011. Indiana residents represented 68% of the total enrollment, while 32% were from other states, Washington D.C., or foreign countries.

The table below sets forth the total number of beginning student applications received, applications accepted, percent accepted, and the percent of acceptances for beginning students who enrolled. These numbers are aggregate numbers, combined for all campuses, except for Fort Wayne, which is administered by Purdue University.

Applications and Enrollments 1

Academic Year

Applications Received

Applicants Accepted

Percent Accepted

Percent of Accepted Enrolled

2008-09 46,816 33,864 72.3 42.2 2009-10 50,243 36,493 72.6 39.6 2010-11 57,438 39,438 68.7 35.0 2011-12 53,772 38,576 71.7 36.8 2012-13 55,091 39,855 72.3 36.3

Source: University Institutional Research and Reporting 1 Figures reflect all beginning students new to the University, regardless of class, excluding transfers.

Beginning students are defined by their matriculation in the fall, or either of the preceding summer sessions, as degree-seeking students. Students who began taking college level coursework while in high school and enrolled as a traditional beginning student during the fall or one of the preceding summer sessions, are also included. This methodology is consistent with external reporting requirements.

In the 2012-13 academic year, for the Bloomington campus, the percentage of beginning students ranking

in the upper 50% of their high school class was 95%. During the same period the percentage of beginning students ranking in the upper 25% of their high school class was 70%, and the percentage of beginning students ranking in the upper 10% was 34%.

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The following table shows the average composite score on the Scholastic Aptitude Test (“SAT”) over the past five years for all beginning students new to the University, regardless of class, and excluding transfer students to the University, as compared to the national average:

Average SAT Scores

Academic Year Indiana University National 2008-09 1064 10172009-10 1068 10162010-11 1067 10172011-12 1068 10112012-13 1071 1010

Source: University Institutional Research and Reporting Student Enrollment

The headcount enrollments for Bloomington, IUPUI and regional campuses of the University, including Fort Wayne, for the fall semester 2008 through 2012 are shown in the following table. The Fort Wayne enrollment numbers indicate the students in Indiana University academic programs on that campus.

Total Actual Headcount Enrollment by Campus Including Fort Wayne 1

Fall Semester Bloomington IUPUI Regional Total Enrollment 2008 40,354 30,300 31,073 101,727

2009 42,347 30,383 34,430 107,160

2010 42,464 30,566 36,415 109,445

2011 42,731 30,530 37,175 110,436

2012 42,133 30,451 37,809 110,393 Source: University Institutional Research and Reporting 1 The University ceased projecting enrollments for the Fort Wayne campus which is administered by Purdue University.

However, actual Fort Wayne data is still collected and is included in the above chart. Actual headcount enrollment for the Fort Wayne campus that is included in the Regional and Total Enrollment numbers above is as follows: fall 2008 – 6,948; fall 2009 – 7,720; fall 2010 – 8,204; fall 2011 – 8,456; and fall 2012 – 8,326.

Purdue University administers and is fiscally responsible for the Fort Wayne campus. Projected headcount

enrollments for Bloomington, IUPUI and the regional campuses of the University, excluding Fort Wayne, for the fall semester 2013 through 2015 are shown in the following table.

Projected Headcount Enrollment by Campus Excluding Fort Wayne

Fall Semester Bloomington IUPUI Regional Total Enrollment 2013 42,614 30,428 28,993 102,035

2014 42,984 30,238 28,670 101,892

2015 43,100 30,420 28,921 102,441 Source: University Institutional Research and Reporting from the preliminary Fall 2011 Enrollment Study

The following table sets forth the total actual and projected headcount enrollment of undergraduate and

graduate students, including professional programs, combined for all campuses, excluding Fort Wayne, for the fall semester of the years indicated. The table also includes full-time equivalent enrollment and total annual credit hours taken. These numbers are reported on an academic year basis, which includes the fall semester noted, the Summer II session that precedes it, and the spring semester and Summer I session of the subsequent year.

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Undergraduate and Graduate Enrollment, Full-Time Equivalent Enrollment and Total Annual Credit Hours Taken Excluding Fort Wayne

Fall

Semester

Undergraduate

Graduate & Professional

Total

Full-Time Equivalent

Total

Annual Credit Hours Taken

Actual

2006 71,784 19,629 91,413 72,563 2,271,014 2007 72,540 19,953 92,493 73,786 2,302,300 2008 74,486 20,293 94,779 76,239 2,393,959 2009 78,602 20,838 99,440 80,293 2,512,858 2010 80,356 20,885 101,241 81,842 2,558,999 2011 81,187 20,793 101,980 82,230 2,548,801 2012 81,974 20,093 102,067 81,728 2,560,000 1

Projected 2 2013 81,017 21,018 102,035 82,104 2,560,000 2014 80,967 20,925 101,892 82,091 2,560,000 2015 81,449 20,992 102,441 82,514 2,560,000

Source: University Institutional Research and Reporting from the preliminary Fall 2011 Enrollment Study 1 Estimated. 2 The projections presented above were prepared in the fall of 2011. No representation can be made as to the ability of the University to achieve these projections.

Fees

The University operates its programs on a two-semester and summer-session basis. Tuition, fees and other costs of attending the University vary by campus and curriculum. Educational costs charged by the University include instructional fees (which include other fees allocated to debt retirement), fees associated with specific courses and/or academic programs, and room and board (if the student lives on campus). In addition, individual campuses may charge other mandatory fees to support certain campus-based services, e.g. bus service, computing clusters, etc.

Fee Payment Policy Payment may be made in full by a specified date prior to the first day of classes for a particular term, or the student may pay a partial payment with from one to three subsequent installments over a one- to three-month period depending on the plan offered.

Regular Instructional Fee Rates The Trustees establish fees and charges relating to credit enrollment. On the Bloomington campus, undergraduate students taking between 12 and 17 hours are assessed a flat instructional fee. Graduate students are assessed fees on a credit-hour basis, except for students in the MBA, Law (J.D.) and Optometry (O.D.) programs. On campuses other than Bloomington, fee rates are assessed on a credit-hour basis except for professional students in Medicine and Dentistry.

The tables on the following pages set forth the regular instructional fees for graduate and undergraduate students attending the University for the academic years indicated. Figures are on a per-credit-hour basis unless otherwise indicated.

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Instructional Fees

Academic Year 2008-09 2009-10 2010-11 2011-12 2012-13Bloomington Campus Undergraduate: per semester (12-17 credit hours)

Resident $3,684.15 $3,861.00 $4,062.00 $4,216.30 $4,375.00Non-Resident 11,952.95 12,634.50 13,392.50 14,224.55 15,100.00

Undergraduate: per semester (<12 or >17 credit hours)

Resident 230.05 241.10 253.70 263.45 273.40Non-Resident 747.15 789.80 837.20 889.03 943.75

Graduate and Professional: per credit 1

Resident 291.97 291.97 291.97 309.50 321.90Non-Resident 850.33 850.33 850.33 902.00 938.00

IUPUI Campus Undergraduate: per credit hour

Resident 217.70 230.76 241.84 247.90 254.10Non-Resident 663.95 727.33 793.25 860.00 936.00

Graduate and Professional: per credit 1

Resident 259.35 272.30 283.20 303.00 318.20Non-Resident 776.90 819.60 852.40 912.10 957.70

Regional Campus: East Undergraduate: per credit hour

Resident 172.60 180.54 189.21 193.94 198.79Non-Resident 444.80 485.72 530.41 546.76 563.12

Graduate: per credit hour 1 Resident 209.60 216.73 225.18 238.06 250.94Non-Resident 479.50 523.61 571.78 581.49 591.20

Regional Campus: Fort Wayne Undergraduate: per credit hour

Resident 219.85 230.85 242.40 248.45 254.65 Non-Resident 518.15 549.25 582.20 596.75 611.65

Graduate: per credit hour 1 Resident 271.05 284.60 298.85 306.30 313.95Non-Resident 602.25 638.40 676.70 693.60 710.95 Regional Campus: Kokomo Undergraduate: per credit hour

Resident 172.45 180.25 188.75 193.47 198.31Non-Resident 444.55 469.89 497.61 530.36 563.12

Graduate: per credit hour 1

Resident 209.45 216.36 224.58 237.76 250.94Non-Resident 479.10 497.31 518.69 554.95 591.20

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Instructional Fees

Academic Year 2008-09 2009-10 2010-11 2011-12 2012-13Regional Campus: Northwest Undergraduate: per credit hour

Resident $174.25 $182.61 $191.74 $196.53 $201.44Non-Resident 444.75 486.11 531.32 547.22 563.12

Graduate: per credit hour 1 Resident 206.65 221.10 236.60 243.77 250.94Non-Resident 480.90 514.55 550.55 570.88 591.20

Regional Campus: South Bend Undergraduate: per credit hour

Resident 177.45 185.75 194.75 199.62 204.61Non-Resident 481.35 509.00 539.00 551.06 563.12

Graduate: per credit hour 1 Resident 212.30 220.58 230.29 240.62 250.94Non-Resident 522.55 542.93 566.82 579.01 591.20

Regional Campus: Southeast Undergraduate: per credit hour

Resident 172.80 180.58 189.07 193.80 198.65Non-Resident 444.80 470.15 497.89 530.50 563.12

Graduate and Professional: per credit 1

Resident 214.00 223.00 232.00 241.47 250.94Non-Resident 486.40 506.00 526.00 558.60 591.20

Source: University Institutional Research and Reporting 1 This reflects the majority of graduate students not in professional programs. The professional programs have their own rates, which are higher.

Annual Instructional Fee The following table sets forth the annual instructional fees for full-time

Bloomington campus students, for the academic years indicated. Undergraduate fee rates assume a load of 30 credit hours per year.

Annual Instructional Fees for Full-Time Bloomington Campus Students

Academic Year 2008-09 2009-10 2010-11 2011-12 2012-13Undergraduate, Resident $ 7,368 $ 7,722 $ 8,124 $ 8,433 $ 8,750Undergraduate, Non-resident 23,906 25,269 26,785 28,449 30,200

Source: University Institutional Research and Reporting

Mandatory Fees

During the 2012-13 academic year, new and returning undergraduate students at the Bloomington campus who enrolled in more than 6.0 credit hours will pay mandatory fees per year as follows: Student Activity Fee of $185.48, Student Health Fee of $220.44, Technology Fee of $394.56, Transportation Fee of $122.72, and a temporary fee for repair and rehabilitation of facilities (“Temporary R&R Fee”) of $360.00. During the 2012-13 academic year, fulltime students at IUPUI will pay a mandatory General Fee of $662.20 and a Temporary R&R Fee of $319.92. Rates for part-time students are based on the number of credit hours taken. Full-time students at regional campuses will pay a Temporary R&R Fee of $120.00, and a Student Activity Fee and Technology Fee that vary based on the campus and the number of credit hours taken.

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Student Budget The following student budget is being used by the University’s Bloomington Office of Student Financial Assistance and represents an estimate of standard per-student costs for undergraduate first-year students at the Bloomington campus for the academic year shown.

Estimated Student Budget for the 2012-13 Academic Year for an Undergraduate First-Year Student

Cost of Attendance Resident Non-Resident Instructional Fees  $8,750 $30,200 Mandatory Fees  1,283 1,283 

Tuition and Fees Subtotal $10,033 $31,483 Room/Board 1  $8,853 $8,853 Books/Supplies  848 848 Miscellaneous  2,522 2,522 Transportation  860 860 

Other Costs Subtotal $13,083 $13,083 Estimated Budget Total $23,116 $44,566 

Source: University Institutional Research and Reporting 1 All undergraduate first-year students on the Bloomington campus are required to

live on campus, currently defined as residence halls, on-campus apartments, and fraternity and sorority houses.

Student Fee Revenues The total amount and composition of student fee revenues of the University,

including instructional fees and other fees charged, for each of the fiscal years shown are as follows:

Student Fee Revenues (dollars in thousands)

Fiscal Year Ended June 30 2008 2009 2010 2011 2012 Est. 4 Student Fees Per Indenture Gross Student Fees $878,229 $985,888 $1,088,373 $1,145,260 $1,210,085 Less Certain Dedicated Fees 1 (452) (441) (0) (0) (0)Student Fees Per Indenture 2 $877,777 $985,447 $1,088,373 $1,145,26 $1,210,085 Student Fees Per Financial Report 3 Gross Student Fees $878,229 $985,888 $1,088,373 $1,145,26 $1,210,085 Less Scholarship Allowance (114,154) (133,054) (170,091) (189,079) (198,207)Student Fees Net of Scholarship Allowance 2 $764,075 $852,834 $ 918,282 $ 956,181 $1,011,878 Source: Financial Management Services (student fees and scholarship allowances are from the financial reports of the University for fiscal years ended June 30, 2008 through 2011) and estimated for fiscal year ended June 30, 2012; University Budget Office (dedicated fees) 1 The University issued bonds prior to 1985 to finance the construction of certain facilities, which bonds are secured by certain

dedicated fees. Such dedicated fees are excluded from the definition of “Student Fees” under the applicable indenture. 2 The presentation of information in this table has been expanded to reflect the distinction between the calculation of student

fees that are subject to the lien of the indenture securing the University’s Student Fee Bonds and the required financial reporting presentation of student fees net of scholarship allowances.

3 See “Financial Operations of the University - Statement of Revenues, Expenses and Changes in Net Assets”. 4 The 2012 figures are estimates and are subject to change.

Student Financial Aid

Excluding the Fort Wayne Campus, approximately 68% of the students at the University receive financial aid that is processed through the University. The following table summarizes the financial aid, including parent loans, provided to the University’s students for the five fiscal years ending June 30, 2011. A substantial portion of the funds provided are derived from sources outside the University, including federal, State, and private sources. Historically, federal loans, grants and other programs have provided a large portion of student financial assistance. All programs furnished by the federal and State government are subject to appropriation and funding by the

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respective legislatures. There can be no assurance that the current amounts of federal and State financial aid to students will be available in the future at the same levels and under the same terms and conditions as currently apply.

Student Financial Aid 1

(dollars in thousands)

Fiscal Year Ended June 30 2007 2008 2009 2010 2011 Gifts and Grants $279,329 $322,515 $371,747 $442,993 $487,494Loans 473,440 497,311 559,674 624,888 650,105Work Study 2 5,209 4,857 4,976 5,516 5,764Total Financial Assistance $757,978 $824,683 $936,397 $1,073,397 $1,143,363

Source: University Institutional Research and Reporting 1 Excludes Fort Wayne Campus. 2 Work Study includes student income from jobs that are located on and off campus, as well as some student academic

appointment (SAA) stipends. SAA stipends and student income that are not funded with Work Study funds are not considered financial aid under federal Title IV guidelines and are excluded.

Financial Operations of the University

As a component unit of the State, the University presents its financial statements in accordance with Governmental Accounting Standards Board (“GASB”) Statement No. 35, Basic Financial Statements—and Management’s Discussion and Analysis—for Public Colleges and Universities, within the financial reporting guidelines established by GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, and with accounting principles generally accepted in the United States of America, as prescribed by GASB. The University reports on a consolidated basis, with a comprehensive, entity-wide presentation of the University’s assets, liabilities, net assets, revenues, expenses, changes in net assets, and cash flows.

The accompanying financial statements have been prepared by the University operating as a special-purpose government entity engaged in business-type activities. Accordingly, these financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned and expenses are recorded when an obligation has been incurred. Eliminations have been made to minimize the “double-counting” of internal activities.

The University applies all applicable GASB pronouncements. In addition, the University has elected to apply only those Financial Accounting Standards Board (“FASB”) Statements and Interpretations, Accounting Principles Board (“APB”) Opinions, and Accounting Research Bulletins (“ARB”) issued on or before November 30, 1989, except for those that conflict with or contradict GASB pronouncements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

The Statement of Revenues, Expenses and Changes in Net Assets of the University, in table format for the fiscal years shown, is on the following page.

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Statement of Revenues, Expenses and Changes in Net Assets (dollars in thousands)

Fiscal Year Ended June 30 2007 2008 2009 2010 2011 Operating revenues Student fees $785,127 $878,229 $985,888 $1,088,373 $1,145,260 Less scholarship allowance (98,006) (114,154) (133,054) (170,091) (189,079) Federal grants and contracts 286,687 290,929 295,737 318,646 344,642 State and local grants and contracts 25,153 21,100 28,860 23,830 17,074 Nongovernmental grants and contracts 121,853 107,146 127,049 102,839 103,439 Sales and services of educational units 49,108 48,929 61,498 64,475 60,869 Other revenue 185,891 171,284 175,506 181,640 190,661 Auxiliary enterprises 1 336,397 319,153 332,586 323,571 330,550

Total operating revenues $1,692,210 $1,722,616 $1,874,070 $1,933,283 $2,003,416

Operating expenses Compensation and benefits $1,455,868 $1,535,335 $1,632,926 $1,684,964 $1,731,042 Student financial aid 98,061 109,566 125,830 150,779 165,299 Energy and utilities 52,409 57,773 65,447 64,031 68,534 Travel 36,231 39,481 40,397 36,930 40,219 Supplies and general expense 469,503 428,521 449,435 430,712 443,499 Depreciation and amortization expense 111,860 116,683 120,819 125,715 130,538

Total operating expenses $2,223,932 $2,287,359 $2,434,854 $2,493,131 $2,579,131

Total operating loss $ (531,722) $ (564,743) $ (560,784) $ (559,848) $ (575,715)

Nonoperating revenues (expenses) State appropriations $ 527,747 $ 558,022 $ 572,578 $ 549,755 $ 549,917 Grants, contracts, and other 46,285 51,317 63,304 99,613 120,035 Investment income 85,462 30,721 (17,607) 103,265 89,644 Gifts 67,398 77,272 76,181 78,049 104,814 Interest expense (35,952) (29,112)2 (31,829) (32,401) (33,155)Net nonoperating revenues $ 690,940 $ 688,220 $ 662,627 $ 798,281 $ 831,255

Income before other revenues, expenses, gains, or losses $ 159,218 $ 123,477 $ 101,843 $ 238,433 $ 255,540

Capital appropriations $ 10,467 $ 12,601 $ 10,248 $ 3,005 $ 11,984 Capital gifts and grants 3,311 10,217 19,980 17,323 14,565 Additions to permanent endowments 2,147 264 0 545 45Total other revenues $ 15,925 $ 23,082 $ 30,228 $ 20,873 $ 26,594

Increase in net assets $ 175,143 $ 146,559 $ 132,071 $ 259,306 $ 282,134Net assets, beginning of year 2,017,485 2,138,9312 2,285,490 2,417,561 2,676,867

Net assets, end of year $2,192,628 $2,285,490 $2,417,561 $2,676,867 $2,959,001

Source: Financial Management Services from financial reports of the University for fiscal years ended June 30, 2007 through 2011; See accompanying notes to the financial statements. 1 Net of scholarship allowance of $12,245; $13,796; $15,850; $18,750; and $21,151 (in thousands) for 2007 through 2011 2 As restated

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Operating Budget and Related Procedures

The University adopts an operating budget for each fiscal year based on detailed budgets submitted by each of the University’s departments. These budgets are reviewed by the President and senior administrative officers before final approval by the Trustees. In conjunction with its budgeting process, the University submits a biennial appropriation request to the State Budget Agency, the Indiana Commission for Higher Education and the General Assembly. The State appropriation includes various components for operations, fee replacement (a form of reimbursement of debt service from the State for debt associated with certain educational facilities), maintenance, research, public service and other special functions. For more information, see “State Appropriations to the University” below. The Trustees takes into consideration the specific amounts of State appropriations authorized by the General Assembly, along with the University’s budget requirements and other revenue sources when establishing student fees and other fees for each academic year.

The University has adopted a balanced operating budget for the fiscal year ending June 30, 2013. Total budgeted revenues and expenditures for campuses for which the University has fiscal responsibility are shown in the table below.

Operating Budget for Unrestricted, Restricted and Auxiliary Enterprise Funds 1,2

(dollars in thousands)

Revenues by Category 2013 Student Fees $1,169,019 State Appropriation 499,907

Grants and Contracts 441,600 Sales and Services 91,945 Auxiliary Enterprises 386,893 Designated and Other Restricted 222,375 Investment 12,357 Gifts 4,041 Other 183,458

Total $3,011,595

Expenditures by Fund Group 3 General $1,960,727 Designated and Other Restricted 222,375

Subtotal $2,183,102 Grants and Contracts 441,600 4

Auxiliary Enterprises 386,893 Total $3,011,595

General and Other RestrictedExpenditures by Function

Instruction $998,337 Research and Public Service 50,235 Academic and Student Support 428,864 Physical Plant 180,750 Student Financial Aid 297,645 Institutional Support 227,271

Total $2,183,102

Source: University Budget Office 1 Excludes Fort Wayne campus. 2 Excludes capital projects, some sources of investment income and most gifts, and scholarship allowance. 3 Net of internal transfers. 4 Includes research, service and instruction expenditures.

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State Appropriations to the University

The University has historically received, and continues to expect to receive, appropriations from the General Assembly. Annual operating appropriations are disbursed on a monthly basis. Other types of appropriations are generally disbursed on a quarterly or semi-annual basis. These appropriations are applied to the educational and general expenditures of the University, as well as for certain capital construction activities of the University.

The General Assembly has historically appropriated to the University an amount equal to the annual debt service requirements due on previously approved and outstanding Student Fee Bonds (the “Fee Replacement” appropriations). This appropriation is renewed on a biennial basis because the Constitution of the State prohibits a sitting General Assembly from binding subsequent General Assemblies to the continuation of any funds, including Fee Replacement appropriations. Even so, in over 39 years of making Fee Replacement appropriations, the State has never failed to fully fund a Fee Replacement obligation established by a prior General Assembly. The University expects that the policy of Fee Replacement appropriations will be continued in future years.

Total State operating appropriations for the University were cut by two percent for the 2011-13 biennium. The University has taken measures designed to result in an operating budget for 2011-12 that is balanced to the reduced levels of support. In addition, general maintenance, repair and rehabilitation appropriations for the 2011-13 biennium were eliminated. The Trustees approved a temporary repair and rehabilitation fee to help cover the cost of necessary repair work and ongoing maintenance costs for buildings and associated infrastructure, beginning academic year 2011-12 and continuing in academic year 2012-13. See “Mandatory Fees”.

The table below presents the various State appropriations as appropriated to the University for each of the

fiscal years shown below, including the unrestricted general operating appropriation, Fee Replacement appropriations, special restricted appropriations for specific purposes, and general maintenance, repair and rehabilitation and capital appropriations.

State Appropriations as Appropriated

(dollars in thousands)

Fiscal Year 2009 2010 2011 2012 2013 Unrestricted General Operating & $507,211 $504,332 $504,332 $463,932 3 $463,932 Restricted Special Fee Replacement 73,526 1 69,702 70,852 2 51,638 4 48,296 4 General Maintenance, R&R and Capital 12,601 12,601 12,601 0 5 0 Total Appropriated $593,338 $586,635 $587,785 $515,570 $512,228

Source: University Budget Office See combined footnotes under the “State Appropriations as Received” table directly below.

State Appropriations as Received (dollars in thousands)

Fiscal Year 2009 2010 2011 2012 2013 6 Unrestricted General Operating & $502,822 $481,145 $473,858 $464,423 3 $463,932 Restricted Special Fee Replacement 69,802 1 69,702 72,553 2 51,441 4 47,126 4

General Maintenance, R&R and Capital 12,172 1,092 6,062 24,356 5 0 Total Received $584,796 $551,939 $552,473 $540,220 $511,058

Source: Office of the Treasurer 1 The variance in "As appropriated" and "As received" Fee Replacement for fiscal year 2009 resulted from (i) some projects

eligible for fee replacement beginning in fiscal year 2009 not yet having been financed and (ii) some projects financed in 2008 having been financed at a lower interest rate than the Indiana Commission for Higher Education budget guideline.

2 The "As Appropriated" Fee Replacement for fiscal year 2011 reflects the appropriation per the budget bill. Subsequent to the bill, the University issued Student Fee Bonds Series T for projects which received General Assembly authorizations within

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2007-2009 and 2009-2011 and had all the requisite approvals. The "As Received" Fee Replacement which exceeds the "As Appropriated" came from the State Budget Agency Fee Replacement Appropriation Allocation for fiscal year 2011.

3 The "As Received" Unrestricted General Operating & Restricted Special for fiscal year 2012 reflects a claim for The Indiana Higher Education Telecommunications System (IHETS) that was not appropriated to the University, but for which it acts as fiscal agent.

4 The variances in "As Appropriated" and "As Received" Fee Replacement for fiscal years 2012 and 2013 reflect the fiscal year debt service savings from Student Fee Bonds Series U.

5 For fiscal year 2012, the "As Received" Repair & Rehabilitation (R&R) funds were American Recovery and Reinvestment Act (ARRA) appropriations which previously had been cancelled by the state.

6 FY 2013 "As Received" is based on the budget bill, and assumes all FY2013 appropriations will be received.

Indiana University Foundation

The Indiana University Foundation (the “Foundation”) was incorporated in 1936 as a non-profit corporation, separate and distinct from the University, and is empowered to perform a wide range of services and conduct a variety of activities that support the University as it carries out its missions of teaching, research and public service. The Foundation conducts general and special purpose fund raising programs; receives and acknowledges gifts for the benefit of the University; administers those gifts to ensure that they are used as specified by the donor; invests those gifts intended for endowment purposes; serves as trustee for certain types of planned gift arrangements; and provides other services for the benefit of the University as requested from time to time.

The Foundation is governed by a Board of Directors, three members of which must be current members of the Trustees and one member of which must be the President of the University. The assets and income of the Foundation are held and accounted for separately from the funds of the University. As of June 30, 2012, the assets of the Foundation and the assets of the University managed by the Foundation had a market value of approximately $2,105,534,000, the majority of which consisted of funds restricted for University purposes. Distributions from endowment earnings received by the University in fiscal year 2012 totaled approximately $66.6 million, which represented approximately 2% of estimated total University revenues during fiscal year 2012.

Assets, net assets, and annual income of the Foundation and the annual distributions to the University for the fiscal years ended June 30, 2008 through 2012 are set forth below.

Indiana University Foundation Financial Summary (dollars in thousands)

Fiscal Year Ended June 30

Assets1

Net Assets

Total Revenue and Support 2

Distributions to the University 3

2008 $2,111,129 $1,633,177 $192,803 $145,815 4 2009 1,642,126 1,318,118 (156,489) 109,090 4 2010 1,767,561 1,486,267 352,992 145,704 4 2011 2,054,875 1,741,608 379,646 102,174 2012 2,105,534 1,730,081 128,517 107,057 4

Source: Indiana University Foundation The Foundation financial statements as of June 30, 2012 may be obtained at: http://iufoundation.iu.edu/about/financial.html. 1 Assets that the Foundation held for the University and for University affiliates had corresponding liabilities

reported on the Foundation’s Statement of Financial Position for each of the fiscal years shown above. The portion of those assets held for the University and for University affiliates, which represent endowment funds managed by the Foundation, total $197,897,213; $151,304,670; $168,220,929; $207,860,506; and $208,809,374 for the fiscal years ended June 30, 2008 through 2012, respectively. Additional information with respect to University endowment funds is contained within the Endowments section below.

2 See the Foundation’s Statement of Activities for each of the fiscal years shown above. 3 These disbursements include transfers to the University as well as program and departmental support. See

Indiana University Foundation Notes to the Financial Statements, June 30, 2008 – Note 10 and June 30, 2009 through June 30, 2012 – Note 11, Unrestricted University Program Expenditures. June 30, 2010 and 2011 are contained within the accompanying financial report.

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4 Lilly Endowment, Inc. has provided $109,100,000 in contributions through the Foundation for University support and faculty research during fiscal years ended June 30, 2008 through 2012. Total disbursements increased significantly due to the transfer of these funds to the University.

Annual Fund Raising

The Foundation, for the benefit of the University, conducts ongoing annual fund raising campaigns, as well as major gift and special development programs, to raise funds for endowments, research, student support, scholarships, awards, capital projects and special programs.

The following table summarizes the annual contributions through the Foundation for each of the fiscal years indicated:

Private Contributions to the Indiana University Foundation

Fiscal Year Ended June 30

Number of Donors

Receipts 1 (dollars in thousands)

2008 110,461 $251,3852009 101,341 114,6482010 123,652 166,8062011 123,016 146,8862012 117,813 154,035

Source: Indiana University Foundation 1 Include one-time contributions of $69,000,000 in 2008, $15,000,000 in 2009,

$18,500,000 in 2010, and $6,600,000 in 2012 from Lilly Endowment, Inc. Endowments

Endowments are funds in which donors or other outside agencies have stipulated, as a condition of the gift, that the principal be maintained in perpetuity. Funds functioning as endowments are internally designated funds that have not been externally restricted, and for which the principal may be expended.

The market value of endowments and funds functioning as endowments held by the University in each of

the fiscal years ended June 30, 2008 through 2012 are indicated below.

Endowments and Funds Functioning as Endowments 1

(dollars in thousands)

Fiscal Year Ended June 30

Fair Value

2008 $197,861

2009 153,533

2010 172,592

2011 207,594

2012 206,712 2

Source: Financial Management Services from financial reports of the University for fiscal years ended June 30, 2008 through 2009; Office of the Treasurer for fiscal years 2010 through 2012 1 In addition to funds currently held by the Foundation, these figures include

other University endowments, with real estate valued at fair value. 2 The fair value as of September 30, 2012 is $209,418,435. 2012 figures are

unaudited.

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Physical Plant

As of fall 2011, the various campuses of the University covered a total of 3,609 acres. There are 859 buildings on all campuses of the University encompassing 34.5 million gross square feet, of which 21.3 million square feet is assignable to operating units. Not included in the assignable square feet are service, building and parking garage circulation and construction areas, restrooms, hallways, and wall thicknesses. Academic and administrative activities are assigned 11.6 million square feet; auxiliary enterprise services are assigned 9.7 million square feet.

The following table sets forth the University’s net capital assets, for each of the fiscal years shown.

Capital Assets, Net 1 (dollars in thousands)

Fiscal Year Ended June 30

Capital Assets, Net 1

2007 $1,933,4512008 2,048,2042009 2,197,123 2010 2,316,7622011 2,422,233

Source: Financial Management Services from financial reports of the University for fiscal years ended June 30, 2007 through 2011 1 Net of accumulated depreciation.

Capital Program

The University has an ongoing capital improvement program consisting of new construction and the renovation of existing facilities. Capital improvement projects have historically been funded from a variety of sources, including but not limited to State appropriations, debt financing, gifts, and University funds.

In each biennium, the University prepares and updates its ten-year capital improvement plan. This provides

the basis for a capital appropriation request which the University submits each biennium to the State Budget Agency, the Indiana Commission for Higher Education, and the General Assembly. The request identifies the projects and their respective purposes, priorities, amounts and funding sources. The General Assembly will approve or decline the various projects submitted by the University, and may include projects which were not on the initial capital plan request. For projects that receive General Assembly approval, specific funding sources for each project will be stipulated. Not all projects require General Assembly approval.

The following tables summarize capital projects that are currently included in the University’s near-term

financing plan.

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Planned Capital Projects to be Financed with Student Fee Bonds 1

(dollars in thousands)

Borrowing Project Name Campus Amount

IUN Tamarack Hall & Ivy Tech Community College-Northwest 2

Northwest $45,000

Education Technology Building 2 Southeast 22,000Qualified Energy Savings Project 3,4 South Bend 5,250Qualified Energy Savings Project, Phase I 3,4 IUPUI 8,700

$80,950Source: Office of the Treasurer 1 Secured by a pledge of student fees.

2 Projects have been approved by the General Assembly but no fee replacement was appropriated for the

2011-13 biennium for these projects. Timing of the borrowing for these projects is uncertain. 3 To be financed with Series V Bonds. 4 Requisite State approvals have been received.

Planned Capital Projects to be Financed with Consolidated Revenue Bonds 1

(dollars in thousands)

Borrowing Project Name Campus Amount

International Studies Building 2 Bloomington $10,000Glick Eye Institute Build-Out 2,3 IUPUI 2,800Total $12,800Source: Office of the Treasurer 1 Payable from certain legally available funds of the University. 2 Timing of the borrowing for this project is uncertain. 3 Requisite State approvals have been received.

Planned Capital Projects to be Financed with Certificates of Participation 1

(dollars in thousands)

Borrowing Project Name Campus Amount

International Studies Building 2 Bloomington $33,000Total $33,000Source: Office of the Treasurer 1 Payable from certain legally available funds of the University. 2 Timing of the borrowing for this project is uncertain.

Planned Capital Projects to be Financed with Qualified Energy Savings Debt 1

(dollars in thousands)

Borrowing Project Name Campus Amount 2

Qualified Energy Savings Project 2,3 East $ 1,350Qualified Energy Savings Project, Phase II 2,4 IUPUI 6,300Qualified Energy Savings Project 2,4 Bloomington 15,000Total $22,650Source: Office of the Treasurer 1 The type of borrowing for these projects is uncertain, as they could be financed with qualified energy savings notes (to be repaid from energy savings and further secured by a junior (subordinate) lien on

student fees) or student fee bonds. 2 Timing of the borrowing for these projects is uncertain.

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3 Requisite State approvals have been received. 4 The University expects to request approval from the State to borrow for these projects.

The University has used its tax-exempt commercial paper (“TECP”) programs to provide interim financing

for certain capital projects and may do so in the future. As of October 1, 2012, no TECP is outstanding. Indebtedness of the University

The University is authorized by various acts of the General Assembly to issue bonds for the purposes of financing the construction of academic and administrative facilities, student housing facilities, student union buildings, athletic facilities, and parking facilities on all campuses and research facilities on the Bloomington and IUPUI campuses.

The University has never failed to pay punctually, and in full, all amounts due for principal of and interest

on any indebtedness. All debt instruments outstanding as of October 1, 2012 are fixed-rate instruments. No variable rate debt, auction rate debt or swaps were outstanding as of October 1, 2012. The total outstanding bonded indebtedness (unaudited) as of October 1, 2012 is summarized in the table that follows.

Facilities Indebtedness as of October 1, 2012 1 (dollars in thousands)

Type of Issuance

Original Amount

Principal Amount Outstanding

Student Fee Bonds 2 $ 775,932 $ 433,310 3

Student Residence System Bonds (Housing) 4,5 20,620 1,895

Facility Revenue Bonds (Parking) 4,5 24,310 8,730

Consolidated Revenue Bonds 5 451,885 418,215

Certificates of Participation 5 45,715 43,270

Energy Savings Notes 6 5,138 2,555

Total $ 1,323,600 $ 907,975

Source: Office of the Treasurer 1 Prior to the financings described under “Capital Program - Planned Capital Projects to be Financed with Student Fee Bonds”

and the refundings to be effected by the Series V Bonds. This table does not reflect unamortized bond premium or deferred charges.

2 Secured by a pledge of Student Fees. 3 This number is net of the accreted value of outstanding capital appreciation bonds ("CABs"). Subsequent to the most recent

debt service payment as of August 1, 2012, the principal amount outstanding as of October 1, 2012 for Student Fee Bonds, including the accreted value of the CABs through August 1, 2012, is $446,652,438.

4 Secured by a pledge of net income of the designated auxiliary enterprises and also payable from certain other legally available funds of the University.

5 Payable from certain legally available funds of the University. 6 The notes will be repaid from energy savings and are further secured by a junior (subordinate) lien on Student Fees.

Risk Management

The University is exposed to various risks of loss, including torts, theft, damage or destruction of assets, errors or omissions, job‐related illnesses or injuries to employees, and health care claims on behalf of employees and their dependents. The University manages these risks through a combination of risk retention and commercial insurance, including coverage from internally maintained funds as well as from a wholly‐owned captive insurance company, Old Crescent Insurance Company (“OCIC”). The University is self‐funded for damage to buildings and building contents for the first $100,000 per occurrence with an additional $400,000 per occurrence covered by OCIC, with commercial excess property coverage above this amount. The University is self‐funded for comprehensive general liability and automobile liability for the first $100,000 per occurrence with an additional

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$900,000 per occurrence covered by OCIC and with supplementary commercial liability umbrella policies. The University has a malpractice and professional liability policy in the amount of $250,000 for each claim and $750,000 annually in aggregate provided by OCIC. The University is self‐funded for the first $750,000 of any worker’s compensation claim. Excess commercial coverage for up to $1,000,000 is in place for employer liability claims. Worker’s compensation claims above $750,000 are subject to statutory limits.

The University has four health care plans for full‐time appointed employees, one of which is also available to retirees not eligible for Medicare. All of the employee plans are self‐funded. The University records a liability for incurred but unpaid claims for university‐sponsored, self‐funded health care plans. This liability is estimated to be no more than 15% of the paid self‐funded claims during the fiscal year, and totals $26,435,000 and $33,099,000 at June 30, 2011 and 2010, respectively. In addition, a potential claims fluctuation liability of $9,876,000 has been recorded at June 30, 2011 and 2010.

Separate funds have been established to account for the liability of incurred but unpaid health care claims, as well as any unusual catastrophic claims fluctuation experience. All organizational units of the University are charged fees based on estimates of the amounts necessary to pay health care coverage costs, including premiums and claims. See the accompanying Indiana University Financial Report, 2010-11 – Note 11. Retirement Plans

The University provided retirement plan coverage to 18,645 and 18,690 active employees, as of June 30, 2011 and June 30, 2010, respectively, in addition to contributing to the Federal Insurance Contributions Act (“FICA”) as required by law.

Indiana Public Employees’ Retirement Fund The University contributes to the Indiana Public Employees’ Retirement Fund (“PERF”), a defined benefit pension plan with an annuity savings account provision. PERF administers the multiple-employer public employee retirement plans, which provide retirement benefits to plan members and beneficiaries. All support, technical and service employees with at least a 50% full-time equivalent (“FTE”) appointment participate in the PERF plan. There were 6,678 and 6,892 active University employees covered by this retirement plan as of June 30, 2011 and June 30, 2010, respectively. State statutes authorize the University to contribute to the plan and govern most requirements of the system. The PERF retirement benefit consists of the pension and an annuity savings account, both of which are funded by employer contributions. The annuity savings account consists of contributions set by State statute at three percent of compensation plus the earnings credited to members’ accounts. The University has elected to make the contributions on behalf of the members. PERF issues a publicly available financial report that includes financial statements and required supplementary information for the plan as a whole and for its participants. This report may be obtained by writing the Public Employees Retirement Fund, One North Capitol, Suite 001, Indianapolis, IN 46204, by calling 1-888-526-1687, or reviewing the Annual Report online at www.in.gov/inprs/annual reports.htm.

Contributions made by the University totaled $21,404,000 and $20,551,000, for fiscal years ended June 30,

2011 and June 30, 2010, respectively. This represented a 7.0% and 6.5% University pension benefit contribution for fiscal years ended June 30, 2011 and June 30, 2010, respectively, and a 3% University contribution for the annuity savings account provisions each year.

PERF Funding Policy and Annual Pension Cost The contribution requirements of plan members for PERF are established by the Board of Trustees of PERF. The University’s annual pension cost and related information, as provided by the actuary, are presented below.

The employer contributions required by the funding policy at actuarial determined rates are sufficient to

fund the pension portion of the retirement benefit (normal cost) and the amortization of unfunded liabilities. The amortization method and period are level dollar closed over 29 years. The actuarial cost method is entry age normal cost. The employer required contribution is determined using an asset smoothing method. The actuarial valuation date is July 1, 2009.

Actuarial assumptions include: 1) an investment rate of return of 7.25%, 2) projected salary increases of 4%, and 3) a 1.5% cost of living increase granted in each future year, applying to current and future retirees.

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PERF Funding and Annual Pension Cost (dollars in thousands)

Fiscal Year Ended June 30 2009 2010 1 Annual Required Contribution $ 13,330 $ 14,699 Interest on Net Pension Obligation (290) (312) Adjustment to Annual Required Contribution 330 355 Annual Pension Cost $ 13,370 $ 14,742 Contributions Made (13,681) (14,016) Increase (Decrease) in Net Pension Obligation $ ( 311) $ 726 Net Pension Obligation, Beginning of Year (3,996) (4,307) Net Pension Obligation, End of Year $ (4,307) $ (3,581) Source: Financial Management Services from the Indiana University 2010-11 Financial Report – Note 12, accompanying this document 1 Actuarial data for June 30, 2011 was not available at the time of the financial report.

Annual Pension Cost Contributed and Net Pension Obligation

(dollars in thousands)

Fiscal Year Ended June 30

Annual Pension Cost (APC) 1

Percentage of APC Contributed

Net Pension Obligation

2008 $11,995 107% $(3,996) 2009 13,370 102% (4,307) 2010 14,742 95% (3,581)

Source: Financial Management Services from the Indiana University 2010-11 Financial Report – Note 12, accompanying this document 1 Does not reflect costs attributable to the University's 3% defined contribution benefit. See Indiana

Public Employees' Retirement Fund above.

Academic and Professional Staff Employees Appointed academic and professional staff employees with

at least 50% FTE are covered by the IU Retirement Plan. This is a defined contribution plan under IRC 403(b) with four contribution levels. The University contributed $66,860,000 during fiscal year ended June 30, 2011, and $65,418,000 during fiscal year ended June 30, 2010, to TIAA-CREF for the IU Retirement Plan. The University contributed $21,804,000 during fiscal year ended June 30, 2011, and $21,203,000 during fiscal year ended June 30, 2010, to Fidelity Investments for the IU Retirement Plan. Under this plan, 8,504 and 8,810 employees directed University contributions to TIAA-CREF as of June 30, 2011 and June 30, 2010, respectively. In addition, 4,138 and 3,635 employees directed University contributions to Fidelity Investments as of June 30, 2011 and June 30, 2010, respectively.

In addition to the above, the University provides early retirement benefits to appointed academic and

professional staff employees Grade 16 and above. There were 1,173 and 1,215 active employees on June 30, 2011 and June 30, 2010, respectively, covered by the IU Supplemental Early Retirement Plan (“IUSERP”); a defined contribution plan in compliance with IRC 401(a), with participant accounts at TIAA-CREF and Fidelity Investments. The University contributed $2,695,000 and $2,661,000 to IUSERP during fiscal years ended June 30, 2011 and June 30, 2010, respectively. The same class of employees hired prior to January 1, 1989, is covered by the 18/20 Retirement Plan, a combination of IRC Section 457(f) and Section 403(b) provisions. The 18/20 Retirement Plan allows this group of employees to retire as early as age 64, provided the individual has at least 18 years of participation in the IU Retirement Plan and at least 20 years of continuous University service. During the fiscal year ended June 30, 2011, the University made total payments of $33,153,000 to 386 individuals receiving 18/20 Retirement Plan payments. During the fiscal year ended June 30, 2010 the University made total payments of $32,928,000 to 394 individuals receiving 18/20 Retirement Plan payments.

TIAA-CREF issues an annual financial report that includes financial statements and required supplementary information for the plan as a whole and for its participants. This report may be obtained by writing the Teachers Insurance and Annuity Association/College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017-3206.

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Fidelity Investments issues an annual financial report that includes financial statements and required

supplementary information for the plan as a whole and for its participants. This report may be obtained by writing Fidelity Investments, 82 Devonshire Street, Boston, MA 02109.

IU Replacement Retirement Plan Funding Policy and Annual Pension Cost The University has established an early retirement plan for eligible employees to accommodate IRS requirements and as authorized by the Board of Trustees. This plan is called the IU Replacement Retirement Plan. It is a single-employer plan and is qualified under IRC Section 401(a), with normal benefits payable for the participant’s lifetime. Trust and recordkeeping activities are outsourced to the TIAA-CREF Trust Company. As of June 30, 2011 and June 30, 2010, 98 employees were eligible to participate. University contributions related to this plan totaled $1,677,000 and $1,479,000, for fiscal years ended June 30, 2011 and June 30, 2010, respectively, with no employee contributions. These amounts represent 100% of the funding policy contribution.

The following schedule shows the funding policy contributions for the fiscal years indicated for the IU

Replacement Retirement Plan as provided by the actuarial valuation report prepared as of July 1, 2008, for the fiscal year ended June 30, 2009, prepared as of July 1, 2009, for the fiscal year ended June 30, 2010, and prepared as of July 1, 2010 for the fiscal year ended June 30, 2011.

IU Replacement Retirement Plan Funding Contributions (dollars in thousands)

Fiscal Year Ended June 30 2009 2010 2011Cost of benefits earned during the year $ 696 $ 659 $ 808Amortization of unfunded actuarial accrued 473 710 767Interest 94 110 102Funding policy contribution $1,263 $1,479 $ 1,677Source: Financial Management Services from the Indiana University 2010-11 Financial Report – Note 12, accompanying this document The funded status of the IU Replacement Retirement Plan as provided by the actuarial valuation reports for

fiscal years ended June 30, 2009, 2010, and 2011 is as follows: IU Replacement Retirement Plan Funded Status

(dollars in thousands)

Actuarial Valuation Date July 1, 2008 July 1, 2009 July 1, 2010Actuarial accrued liability (“AAL”) $16,750 $17,713 $21,497

Actuarial value of plan assets 11,159 9,422 11,541

Unfunded actuarial liability $ 5,591 $ 8,291 $ 9,956

Actuarial value of assets as a % of AAL (funded ratio) 66.6% 53.2% 53.7%

Annual covered payroll $ 8,612 $ 8,446 $ 8,643

Ratio of unfunded actuarial liability to annual 64.9% 98.2% 115.2% covered payroll Source: Financial Management Services from the Indiana University 2010-11 Financial Report – Note 12, accompanying this document

Actuarial assumptions include a 6.5% asset rate of return and future salary increases of 3% for the fiscal

year ended June 30, 2011, and an 8% asset rate of return and future salary increases of 3% for the fiscal year ended June 30, 2010. Liabilities are based on the projected unit credit method. The actuarial value of assets is equal to the fair value on the valuation date adjusted for employer contributions receivable. Actuarial assumptions of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of future events including future employment and mortality, and are based on the substantive plan provisions.

Additional multiyear trend information regarding the funding progress of the IU Replacement Retirement

Plan is provided immediately following the notes to the financial statements.

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TIAA-CREF issues an annual financial report that includes financial statements and required

supplementary information for the plan as a whole and for its participants. This report may be obtained by writing the Teachers Insurance and Annuity Association/College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017-3206.

Postemployment Benefits

Plan Description The University provides certain postemployment benefits for retired employees. The IU 18/20 Plan, Medical, and Life Insurance benefits are presented for financial statement purposes as a consolidated plan (the “Plan”) under the requirements for reporting Other Postemployment Benefit Plans (“OPEB”) required by GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The Plan is a single-employer defined benefit plan administered by Indiana University. The 18/20 Plan provides interim benefits to full-time appointed academic and professional staff employees who meet the following eligibility requirements: 18 years of participation in the IU Retirement Plan 15% level, at least 20 years of continuous full-time University service, and at least 64 years of age. This group of employees is eligible to receive monthly payments based on a hypothetical monthly annuity amount at age 70, up to the amount of terminal base salary, calculated as the average budgeted base salary for the five 12-month periods immediately preceding retirement. The 18/20 Plan was adopted by the Trustees. The University provides medical care coverage to individuals with University retiree status and their dependents. The cost of the coverage is borne fully by the individual. However, retiree medical care coverage is implicitly more expensive than active-employee coverage, which creates an implicit rate subsidy. The University provides retiree life insurance benefits in the amount of $6,000 to terminated employees with University retiree status. The health and life insurance plans have been established and may be amended under the authority of the Trustees. The Plan does not issue a stand-alone financial report.

Funding Policy The contribution requirements of plan members and the University are established and

may be amended by the Board of Trustees. The University contribution to the 18/20 Plan and retiree life insurance is based on pay-as-you-go financing requirements. Plan members do not make contributions. The medical plans are self-funded and each plan’s premiums are updated annually based on actual claims. Retirees receiving medical benefits paid $1,088,000 and $1,066,000 in premiums in the fiscal years ended June 30, 2011 and 2010, respectively. The University contributed $52,512,000 and $52,613,000 to the consolidated OPEB Plan in fiscal years ended June 30, 2011 and 2010, respectively. Annual OPEB Cost and Net OPEB Obligation The University’s annual OPEB cost (expense) is calculated based on the annual required contribution (“ARC”) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period of twenty-five years. The following table shows the University’s annual OPEB cost for the year, the amount actually contributed to the plan, and the University’s net OPEB obligation as provided by the actuarial results for the fiscal year ended June 30, 2011:

Annual Other Postemployment Benefit Plans Cost

(dollars in thousands)

Fiscal Year Ended June 30 2010 2011ARC/Annual OPEB cost $ 57,859 $ 58,167 Less Employer contribution 52,613 52,512 Increase in OPEB obligation $ 5,246 $ 5,654 Net OPEB obligation, beginning of year 8,657 13,903 Net OPEB obligation, end of year $ 13,903 $ 19,557 Percentage of annual OPEB cost contributed 90.9% 90.3% Source: Financial Management Services from the Indiana University 2010-11 Financial Report – Note 13, accompanying this document

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Funded Status and Funding Progress As of June 30, 2011, the most recent actuarial valuation date, the Plan was unfunded. The schedule of funding progress is below:

Other Postemployment Benefit Plans Funded Status and Funding Progress

(dollars in thousands)

Actuarial Valuation

Date

Actuarial Value of Assets

(a)

Actuarial Accrued Liability (AAL)

(b)

Unfunded Actuarial

Liability (UAAL)

(b) – (a)

Funded Ratio (a/b)

Covered Payroll

(c)

UAAL as Percentage of

Covered Payroll ((b-a)/c)

July 1, 2008 -- $488,523 $488,523 0.0% $868,809 56.2% July 1, 2009 -- 443,276 443,276 0.0% 967,369 45.8% July 1, 2010 -- 441,968 441,968 0.0% 959,198 46.1%

Source: Financial Management Services from the Indiana University 2010-11 Financial Report – Taken from the additional multiyear trend information regarding the funding progress of the Other Postemployment Benefit Plans, which is provided immediately following the notes to the financial statements, accompanying this document. It contains one more year than shown in Note 13.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and

assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the University are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, represents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on

the substantive plan (the Plan as understood by the University and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the University and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

The projected unit credit cost method was used in the June 30, 2011 actuarial valuation. The actuarial

assumptions include a 4.5 percent investment rate of return, which is a blended rate of (1) the expected long-term investment returns on plan assets and (2) the University’s investments which are calculated based on the funded level of the Plan at June 30, 2011; and an annual healthcare cost trend rate that ranges from 9.0 percent in fiscal year 2011 to 4.5 percent in 2020. The rate includes a 3 percent inflation assumption. The Unfunded Actuarial Accrued Liability is being amortized over 25 years using level dollar amounts on an open group basis.

Termination Benefits

In fiscal year 2011 the University offered certain employees an Early Retirement Incentive Plan (“ERIP”) intended to attain specific institutional objectives: (a) achieve reduction in salary/wage and benefit expenses; (b) redirect positions to focus on higher priorities; and (c) avoid or minimize future involuntary reductions in personnel.

The ERIP provides three benefits not normally provided to separating employees: (a) Income Replacement Payment: A lump sum payment equal to 10‐months pay for tenured faculty, clinical faculty, and librarians and equal to 6‐months pay for any other academic employees and all staff employees; (b) Health Reimbursement Account (“HRA”): five years of annual contributions to an account that reimburses employees for some healthcare expenses, such as premiums, deductibles, and copays; these annual HRA contributions will be based on the employee’s current medical plan enrollment, from $6,000 for Employee Only coverage to $14,500 for family coverage; with a reduction to $5,000 annually at Medicare age (65); and (c) Medical Coverage until Medicare Age (65): continuation in an

A-27

IU‐sponsored medical plan until age 65, by paying the full premium. (Employees with University Retiree Status may participate in a post‐65 Medicare supplement medical plan.)

In fiscal year 2011 the University recognized an expense and liability in the amount of $14,295,000 for Income Replacement Payments. The actuarial accrued liability associated with OPEB was increased by $15,669,000 for HRA contributions.

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APPENDIX B

FINANCIAL REPORT OF THE UNIVERSITY FOR THE FISCAL YEAR ENDED JUNE 30, 2011

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1

2

When we look at all of this evidence—increased

President Michael A. McRobbie, “State of the University” address, September 27, 2011

IU campuses from top left: IU East, IU Bloomington, IUPUI, IU South Bend, IU Northwest, IU Southeast, and IU Kokomo

1

FINANCIAL REPORT 2010–11

2 Message from the President 5 Message from the Senior Vice President

7 Independent Auditors’ Report 8 Management’s Discussion and Analysis15 Statement of Net Assets16 IUF Statement of Financial Position17 Statement of Revenues, Expenses, and Changes in Net Assets18 IUF Statement of Activities19 Statement of Cash Flows 21 Notes to the Financial Statements 45 Excerpts from the IU Foundation– Notes to Financial Statements55 of Indiana University 56 Additional Information

2

Michael A. McRobbiePresident, Indiana University

The Honorable Mitchell E. Daniels, Jr. Governor, State of Indiana State House, Room 206200 West Washington StreetIndianapolis, IN 46204

Dear Governor Daniels:

On behalf of the Trustees of Indiana University, I am pleased to present to you IU’s 2010-11 Financial Report.

In recent years—and like many large enterprises within our state—Indiana University has been faced with

-lenges as a result of the economic downturn. We continue to adjust to a rapidly changing economic and educational environment by evalu-

fundamental questions about what it means to be a public university in the 21st century.

world’s most prestigious national and international academies and societies, including the National Academy of Sciences, the Royal Society, the Amer-ican Academy of Arts and Sciences, and the American Association for the Advancement of Science.

Last year, J. Marc Overhage, M.D., Ph.D., director of medical informatics at the Regenstrief Institute and Sam Regenstrief Professor of Medicine at the IU School of Medicine, was elected to the Institute of Medicine of the National Academy of Sciences.

from IU Bloomington—biologists Lynda Delph, Roger Hangarter, Roger

scientist Edward Carmines—were elected to the American Associa-tion for the Advancement of Science,

society.

In May, IU Ruth Halls and Distin-guished Professor Emerita Susan Gubar, one of the nation’s leading literary scholars and feminist critics,

-sophical Society, the oldest learned society in the country, founded in 1745 by Benjamin Franklin. She became the 21st IU faculty member or alumnus

-sity’s history.

Currently, IU’s faculty includes:

22 members of national academies, 54 members of the American Association for the Advancement of Science; and6 members of the American Philosophical Society.

ATTRACTING TOP STUDENTS

The quality of our faculty, no doubt,

the state, across the country, and

University.

Message from the President Throughout these tumultuous times, though, we have been able to achieve a great deal. Our extraordinary progress—which encompasses nearly every key area at the university—

importance and value of education and research at Indiana University and to building a community of dedicated scholars that immeasurably enriches the life of our state.

Our progress is also testament to

students, who are responsible for

the university and continue to pursue

scholarship, and creativity.

MAKING AN IMPACT THROUGH RESEARCH

-ditures on research at IU performed

supported over recent years by record amounts of grant funding—have exceeded the $500 million mark in

million in research expenditures in the

billion economic impact on the state of Indiana and thousands of jobs.

Our faculty discoveries continue to lead to the creation of new start-up companies, the licensing of new soft-ware, the development of new medical treatments, and the commercialization of new technologies. All of this has a direct impact on strengthening our state’s economic infrastructure and improving the quality of life for all Hoosiers.

RECRUITING AND RETAINING A WORLD-CLASS FACULTY

Indiana University’s outstanding faculty continues to gain national and international prominence in their

of faculty who are members of the

3

We welcomed a record of more than 110,000 students this fall on our eight campuses, as all our campuses have reported record enrollments in the last two years. Nearly 85,000 of those students are from Indiana.

more than 7,400 freshmen on our Bloomington campus, which collec-tively represent the most academi-cally decorated class in our history—including IU’s largest class of National Merit Scholars. Eighty percent of in-state students graduated in the top quarter of their high school class and forty percent in the top 10 percent, including a record 128 valedictorians this year. This cohort of students also earned the highest average SAT scores in the campus’ history.

The student body is becoming steadily more diverse, with students from underrepresented groups at a record high 14 percent.

MAKING AN IU EDUCATION AFFORDABLE AND ACCESSIBLE

As a public university, we have an essential obligation to ensure that an IU education remains accessible and

students geographically, programmati-

To that end, Indiana University

undergraduate tuition for summer

semester students beginning in 2012. If this plan is received as enthusias-tically by our students as I believe it will be, it could make possible a robust year-round approach to educa-tion at IU that is more closely aligned with the needs of a 21st century global marketplace than our current calendar allows. The IU Trustees approved this plan at a special session in late October.

Data published recently on the U.S. Department of Education’s “College Navigator” website show that an IU education is a tremendous value. Resident undergraduates at IU Bloom-ington pay the lowest out-of-pocket

nearly $4,700 per year less than the

the other public Big Ten universities. This achievement saves Hoosier fami-lies an average of more than $18,000 over four years compared with resi-dents of other Big Ten states.

This is due in part to a 230 percent increase in resident undergraduate

increasing campus-funded aid from $18 million to a record $61 million this year, fueled in part by the campus’

Campaign. This campaign, which we just concluded, raised $1.144 billion, including more than $338 million for undergraduate and graduate student support, making it the most successful campaign in IU history.

Other IU campuses have seen similar developments. IUPUI, which is in the

Impact IUPUI fundraising campaign, has increased campus-funded resident

by $8.1 million over four years, a compounded annual increase of 18.3 percent. Our regional campuses have increased campus-funded resident

by nearly 15 percent per year or $2.3 million over four years.

BUILDING FOR THE 21ST CENTURY

Strengthening the university’s infrastructure has been one of our key priorities since the beginning of the recession. We have sought to take advantage of the historically low

economic times to continue to build and renovate facilities for research and education. Over the last three years, we have greatly accelerated the pace and priority of capital renewal at IU. At present across the university, we have four major buildings under construction, and several more new and renovation projects in plan-ning for a total of nearly two million square feet. All of these buildings will support new research and educational activities or student life. The total value of all new construc-tion and renovations in progress or planned is approximately $625 million. Of this total, only 25 percent is provided by the State of Indiana, with 75 percent being provided through private sources or internal university sources.

WORKING TOWARD GREATER HEALTH FOR HOOSIERS

IU’s health science and clinical schools—including the schools of medicine, nursing, dentistry, optom-etry, social work, and health and reha-bilitation science—collectively account for about 40 percent of IU’s $3 billion budget, and as such they represent the largest component.

Taken as a whole, the educational, research, and clinical activities of these schools and programs are one of the major ways in which IU contributes to the social and economic develop-ment of Indiana. Indeed, more than 50 percent of Indiana’s physicians,

dentists, and 60 percent of optom-etrists are trained at IU.

4

areas, including our international presence. It recommends leveraging our outstanding reputation in schol-arship and research on countries, cultures, and regions around the globe by developing a School of International Studies that will further

students even more opportunities for the global education so necessary to their future success.

CONCLUSION -

trates, Indiana University continues to regard the funding it receives as a public trust. We are deeply grateful for the support we receive from state appropriations, donor contributions, grants or contracts, and student fees,

best return on all of those investments.

all of IU’s core missions of education and research and to our engagement in the successful future of the state.

Yours sincerely,

Michael A. McRobbiePresident

Over the next few years, we will

sciences and health care. To this end, we are working to establish two new schools of public health, one at IU Bloomington and one at IUPUI. And earlier this year, Clarian Health Part-ners—the largest statewide hospital system in Indiana and one of the largest in the nation with a budget

Indiana University Health. This change has highlighted the impact that IU has every day on the health and well being of hundreds of thou-sands of Hoosiers.

accelerate the transformation of innovations and intellectual prop-

and students into new products, services, and companies to improve Indiana’s economy and our national competitiveness. Last year was yet another very successful year in this regard with 175 invention disclosures received (a 13 percent increase over last year), a record seven new start-up companies arising from IU licensed technologies, more than $11 million in licensing revenues, and perhaps the biggest news of the year being the acquisi-tion of IU-based Marcadia Biotech by Roche in a deal worth up to $537 million.

EXPANDING OUR GLOBAL PRESENCE

IU continues to increase its interna-tional engagement through globally aware education, enlarged study abroad activity, alumni activity, and expanded strategic partnerships with leading institutions of higher learning throughout the world.

Record numbers of IU students are studying abroad, increasing 11 percent across the IU system, according to the

locations including Asia, Africa and Latin America in addition to Western

the university’s history, we ranked third in the CIC for the number of IU students studying abroad. Addition-ally, IU’s fall 2011 semester enrollment across all eight campuses consists of 7,175 international students from 127

percent increase over the 2010 level and is the largest number of interna-tional students ever enrolled at IU.

The New Academic Directions report for the Bloomington and Indianapolis campuses maps out new develop-ments and even new futures for Indiana University in a number of

STRENGTHENING ECONOMIC ENGAGEMENT

In addition to our role in support of the growth and expansion of IU Health, including the recent dedica-tion of the Glick Eye Institute and the work in progress of the new Neurosciences Center of Excellence in Indianapolis, we are also helping strengthen Indiana’s economy by enhancing our business incubators, convening technology showcase events in partnership with Purdue University, and establishing new busi-ness resource services in collaboration with a number of the state’s Small Business Development Centers from Merrillville to New Albany. Many of our economic development

Research and Technology Corpora-tion (IURTC), whose mission is to

5

Neil TheobaldSenior Vice President and Chief Financial cer, Indiana University

Dear President McRobbie and the Trustees of Indiana University:

pride that I present to you the consoli-

June 30, 2011.

challenging economic conditions under which the university, and all of higher education, was operating. And while the economic picture has brightened somewhat in the past year,

Unemployment in Indiana, and across the nation, remains at stubbornly high levels and wages continue to be stagnant. In Indiana the current jobless rate remains above 8 percent and many of those who have jobs have seen their wages frozen or even cut, making the challenge of paying for a college education greater than ever for many.

In turn, states around the nation

continuing innovative software licensing agreements that allow

essential computer applications at greatly reduced cost. This continues to be a hallmark of information technology at IU and goes back to IU’s path-breaking agreement with

IU tens of millions of dollars.

Altogether, our operating costs last year, calculated as a percentage of full-time enrollment were up less than 1 percent in the 2010-2011 academic year as compared to the previous year.

Indeed, a recent benchmarking study found that our administra-tive costs are lower than those at our peer institutions and that our human resource and payroll processes are

companies. Based on this study, we are also currently restructuring both IU marketing and student services to

-tions where we can without harming our core missions.

As just one example of our progress in these areas, Kiplinger’s Personal Finance magazine rated IU-Bloom-ington 28th in quality for the cost of education, from among more than 500 public institutions.

Additionally, both major credit rating agencies, Moody’s and Standard and

credit ratings during the 2010-2011

handful of U.S. universities to carry a coveted “Aaa” rating from Moody’s.As an “investment grade” institution, we have lowered the cost of servicing

saving the state more than $30 million.

REMAINING TRUE TO OUR MISSION

At the same time we have focused

not lost sight of our core mission: to

continued economic stress by drasti-cally reducing spending in many

many of its neighbors, but even so the state legislature has been forced to

have resulted in reduced support for higher education over the past several years. State support for IU has fallen below 20 percent of our operating

decline further in the coming years.

RISING TO THE CHALLENGE

Despite those challenges, however, I am very pleased to report that Indiana University has remained on extremely

of many of the initiatives we have undertaken in recent years to become

a university, our total net assets – a critical indicator of the university’s

We have made great strides in the hard work necessary to become more

across the university have done more with less, which has allowed us to reduce our ongoing base budget by $36 million for the past two years.

At the same time, we are working

spending by partnering with IU Health and other medical providers to enhance the delivery of clinical services to our employees, retirees, graduate students, and their families. In that vein, we announced a program this fall to bring expanded clinical services to our employees, retirees and graduate students, as well as their families. That program will begin in Bloomington in January 2012 and we anticipate expanding these clinical services to all seven campuses over the next few years.

We also generate an additional $40 million in savings each year through

6

to graduate on time, or even ahead of

use of our facilities.

Our plan to reduce tuition for all

on all our campuses by 25 percent for Indiana residents – and by an equiva-lent dollar amount for non-residents-

to students and their families. It also will encourage more students to take advantage of the IU academic calendar 12 months a year, and in doing so helping them graduate in shorter time with less debt.

This type of innovative thinking has been a hallmark of Indiana Univer-sity for nearly 200 years, and we are

from the way we teach our students to the areas of research our faculty pursues to the manner in which we operate the university in a time of

In his State of the University address this September, President McRobbie urged all of us at IU to rethink what it means to be a public university in the 21st century so that we can strengthen our position as a leading research institution and our commitment to

I think the results detailed in this report make it clear that we begin the next phase in our ongoing journey on

you to closely examine the report and welcome your questions and ideas.

Thanks to all of you for your continued support and leadership of Indiana University.

Sincerely,

Neil TheobaldSenior Vice President and Chief

Additionally, we seek to improve the quality of health for all Hoosiers through the creation of schools of Public Health in Bloomington and Indianapolis, for which we received state approval this fall.

These are just two recent examples of the ambitious research agenda at Indiana University, which adds a sense of urgency to our work to retain

was set aside in the current budget to reward top faculty with raises of up to 5.5 percent in order to remain competitive in the market, even as economic conditions required us to limit overall average salary increases to 1.5 percent for the current academic year. We also continue to actively recruit outstanding faculty while other

COMMITTED TO AFFORDABLE EXCELLENCE

Given the economic challenges we face as a state and a country today, much of the public debate on higher educa-

tuition.

Tuition represents only a fraction of

and the facts are that vast majority of Indiana resident students pay far less than the stated “sticker price” for their IU education. In fact, resident undergraduates at our Bloomington campus pay the lowest out-of-pocket

IU campuses across the state repre-

universities in the state for earning a bachelor’s degree.

Still, we recognize that we can – and should – do even more to increase access to an IU education

taken a major step this fall through a bold new initiative that will lower costs, provide incentive for students

college education, with a special emphasis on serving the educational needs of talented Indiana high school graduates.

As President McRobbie noted in

IU welcomed a record of more than 110,000 students to class this fall, including the most academically recognized freshman class in our history on the Bloomington campus. The fact that 40 percent of our current

in the top 10 percent of their high school classes is a testament to the high quality students IU continues to

of our job, however. Once they are here, we need to help them stay on course to graduate on time with the academic credentials they need to succeed in the 21st century global marketplace.

retaining the outstanding faculty needed to train tomorrow’s scholars and leaders, and to conduct vital research across myriad disciplines. We

-rated for its scholarship and teaching, and with our research expenditures breaking the $500 million mark for

economy and to the well being of its residents.

We are not resting on our laurels, however. For example, we have ambi-tious plans in place to strengthen the already considerable body of work done at the IU School of Medicine through our Strategic Research Initia-tive that will leverage the combined strengths of IU Health and the School of Medicine to produce transforma-tional research with an emphasis on cancer, cardiovascular health and neuroscience.

7

8

The following discussion and analysis provides an

-

has been prepared by management and should be read

footnotes contained in this report.

statements prepared in accordance with Government Accounting Standards Board (GASB) principles. This discussion is designed to assist readers in understanding those statements.

The Statement of Net Assets presents the university’s

university.

The Statement of Revenues, Expenses, and Changes in Net Assets presents the total revenues earned and

Changes in net assets are an indication of improvement or

The Statement of Cash Flows provides additional material

detailed information about the cash activity of the univer-sity during the year. The statement reports the major sources and uses of cash.

STATEMENT OF NET ASSETS

A comparison of the university’s assets, liabilities and net

follows:

Management’s Discussion and Analysis

o de ed a e e o Ne A e(in thousands of dollars)

June 30, 2011 June 30, 2010 June 30, 2009

Current assets $ 820,745

Capital assets 2,422,233 2,316,762

Other assets 1,173,342

To al a e 4,556,576 4,280,207 3,814,246

Current liabilities 554,715 461,007

Noncurrent liabilities 1,042,860 1,077,731

To al liabili ie 1,597,575 1,603,340 1,396,685

Invested in capital assets, net of related debt 1,621,228 1,555,422 Restricted net assets 170,156 157,711 Unrestricted net assets 1,167,617 784,455

To al e a e $ 2,959,001 $ 2,676,867 $ 2,417,561

Assets

Current assets include those that are used to support current operations and consist primarily of cash and cash equiva-lents, securities lending collateral and net receivables.

Noncurrent assets consist mainly of endowments, other noncurrent investments, and capital assets, net of accumu-lated depreciation. Noncurrent receivables consist of student loan receivables scheduled for collection beyond the current year reported.

The following table and chart represent the composition of total assets:

To al A e(in thousands of dollars)

Cash and investments (includes securities lending collateral) 41.3%

Receivables 206,378 4.5%

Capital assets 2,422,233 53.2%

Other assets 1.0%

To al a e $ 4,556,576 100.0%

9

funds received in advance of expenditures on sponsored projects.

The university’s noncurrent capital obligations, leases, notes, and bonds payable, represent 53.1% and 55% of total liabilities at June 30, 2011 and 2010, respectively. Noncur-rent deferred revenue represents funds received in advance of expenditures on sponsored projects and deferred past

for others are advances from the federal government for the purpose of making loans to students.

The following table and chart represent the composition of total liabilities:

To al iabili ie(in thousands of dollars)

Accounts payable and accrued liabilities $ 14.4%

Deferred revenue 214,200 13.4%Noncurrent capital debt 53.1%

Other liabilities (includes securities lending liabilities)

To al liabili ie $ 1,597,575 100.0%

Total liabilities decreased $5,765,000 from June 30, 2010

increase in securities lending collateral. Noncurrent liabili-ties decreased by $34,871,000, or 3.2%, primarily due to net principal payments on bonds and notes.

Total assets of $4,556,576,000 at June 30, 2011 represent an

The net decrease in current assets of $10,817,000 is

construction projects and rebalancing of the investment portfolio with a shift to longer term investments. This

securities lending collateral and an increase of $36,302,000 in short-term investments, or investments with longer maturity timeframes compared to cash equivalents. Secu-rities lending collateral balances vary with the volume of investments available for loan and with the level of demand by borrowers.

Noncurrent investments increased by $186,238,000, primarily due to rebalancing and investment gains. Capital assets, net of accumulated depreciation, increased $105,471,000, or 4.6%, at June 30, 2011, primarily due to net

progress.

Current liabilities are those that are expected to become

Current liabilities consist primarily of accounts payable and other accrued liabilities, including salaries, wages and compensated absences, deferred revenue, and liabili-ties for securities lending activity. The current portion of deferred revenue is comprised of summer session student

Total Liabilities

19.1% 14.4% 13.4%

53.1%

Accounts payable and accrued liabilities

Deferred revenue

Noncurrent capital debt

Other liabilities (includes securities lending liabilities)

Cash and investments (includes securities lending collateral)Receivables

Capital assets

Other assets

Total Assets 1.0%

41.3% 53.2%

4.5%

10

Net Assets Net assets represent the residual interest in the univer-sity’s assets after liabilities are deducted. Net assets are

Invested in capital assets, net of related debt repre-sents the university’s investment in capital assets, such as equipment, buildings, land, infrastructure and improvements, net of accumulated depreciation and related debt.Restricted net assets include amounts that have been restricted by external parties and are divided into two sub-categories: Restricted non-expendable net assets must be held

inviolate and in perpetuity. These funds represent the university’s permanent endowment funds received for the purpose of creating present and future income.

Restricted expendable net assets are available for expenditure by the university, but must be spent according to restrictions imposed by third parties.

Unrestricted net assets include amounts institutionally

The following table and chart represent the composition of net assets:

To al Ne A e(in thousands of dollars)

Invested in capital asssets, net of related debt $ 1,621,228 54.8%

Restricted 170,156 5.7%

Unrestricted 1,167,617

To al e a e $ 2,959,001 100.0%

The $65,806,000 increase in capital assets, net of related debt

investment in the future through development of its long-range capital plans.

Although unrestricted net assets are not subject to third-party restrictions, these funds are subject to internal designations for academic and research initiatives, capital projects, and unrestricted quasi and term endowments. The majority of the university’s overall increase in net assets

increase in unrestricted net assets.

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS

nonoperating. Generally, operating revenues are received for providing goods and services. Nonoperating revenues include state appropriations, gifts and investment income. Operating expenses are those incurred to carry out the normal operations of the university. As a public university, certain revenue sources that are an integral part of opera-tions are required by GASB standards to be reported as nonoperating revenues.

Invested in capital assets, net of related debt

Restricted

Unrestricted

39.5% 54.8%

5.7%

Union Street Dorms, IU Bloomington

11

A summarized comparison of the university’s revenues, expenses, and changes in nets assets is presented below:

o de ed a e e o Re e e , e e , a d ha e i Ne A e(in thousands of dollars)

June 30, 2011

Fiscal Year EndedJune 30, 2010 June 30, 2009

Operating revenues $ 2,003,416 $ $ 1,874,070 Operating expenses (2,434,854)Total operating loss (575,715) (560,784)Nonoperating revenues 864,410 830,682 Nonoperating expenses (33,155) (32,401)Income before other revenues, expenses, gains and losses 255,540 238,433 101,843

Other revenues 20,873 30,228 c ea e i e a e 282,134 259,306 132,071

Ne a e , be i i o ea 2,676,867 2,417,561 2,285,490

Ne a e , e d o ea $ 2,959,001 $ 2,676,867 $ 2,417,561

2011 3.6% 5.1% 3.1%

19.0% 33.0%

11.4% 8.7% 16.1%

2010 2.8% 4.3% 3.7%

19.7% 33.0%

11.6% 8.8% 16.1%

Student fees, netGrants and contractsOther operating revenueAuxiliary enterprisesState appropriations

Investment incomeGiftsOther nonoperating revenue

Student fees, netGrants and contractsOther operating revenueAuxiliary enterprisesState appropriations

Investment incomeGiftsOther nonoperating revenue

12

-cant single source of operating revenue for the university is tuition and fees. Tuition and fees, net of scholarship

-tive funding related to the American Recovery and Reinvestment Act (ARRA) contributed to an increase of

contracts.

more than any other category of expense. The univer-sity’s commitment to preserving access to education is

total operating expenses and increased by $46,078,000,

Nonoperating revenues, net of expenses, increased

increased $22,747,000 and private, non-capital gifts

were received in the areas of scholarships, athletics, the Indiana University Art Museum, the Glick Eye Institute and unrestricted endowments. Total investment income declined

year 2011 due to lower unrealized gains.

2010 to 2011, primarily due to the receipt of one-time federal

awarded to the university through the state for repair and rehabilitation.

STATEMENT OF CASH FLOWS

The Statement of Cash Flows provides additional informa-

statement assists in evaluating the university’s ability to

become due and aids in determining the need for exter-

reconciles the operating income or loss on the Statement of Revenues, Expenses, and Changes in Net Assets to the net cash used in operations.

A summarized comparison of the university’s changes in cash and cash equivalents is presented below:

o a a i e a e e o a h lo (in thousands of dollars)

Fiscal Year Ended June 30, 2011 June 30, 2010 June 30, 2009

Net cash provided (used) by:

Operating activities $ (417,254) $ $

722,257

(303,733) (140,467) (261,661)

Investing activities (101,713) (40,275)

Net increase (decrease) in cash and cash equivalents 118,401 (21,614)

Beginning cash and cash equivalents 574,506

di ca h a d ca h e i ale $ 580,110 $ 671,293 $ 552,892

13

Glick Eye Center,IUPUI

Cash received from operations consists primarily of student fees, grants and contracts, and auxiliary enterprise revenue. Payments to employees represent the largest use of cash for operations. Net cash used in operating activities increased

are used to fund operating activities, including state appro-priations, federal Pell grants and private noncapital gifts.

increase in cash used in this category is primarily due to a

-ties include shifts between cash equivalents and longer term investments.

The university has undertaken projects to develop master plans for the Bloomington and IUPUI campuses. The master plans are intended to guide the university in creating a framework for strategic development and deci-sion-making grounded in academic and research needs,

and broad campus constituencies. On all of the univer-sity’s campuses, the development and renewal of facilities continues to support the mission of the university.

The Cyberinfrastructure Building (CIB) was substantially completed in June 2011 at a total project cost of $35.7 million. The CIB is the latest addition to the university’s growing technology park on the Bloomington campus. The building is designed to visually represent the university’s technology environment and its commitment to innova-tion in service to the university’s teaching, learning and research missions.

The Glick Eye Institute, an $18.5 million construction project, was completed on the IUPUI campus in early 2011. The new building combines space for research, patient care, and education to advance the understanding and treatment of eye disease. The Glick Eye Institute was made possible with a major gift from the Eugene and Marilyn Glick Family Foundation.

The university formally dedicated Union Street Center on the Bloomington campus in December 2010. The student

cost of building construction was $68 million.

Harper Hall on the South Bend campus, home of the Mike and Josie Harper Cancer Research Institute, was dedicated in March 2011. The building was constructed as a collabor-

Indiana University School of Medicine. A gift of $10 million to Notre Dame was matched with a $10 million appropria-tion from the State of Indiana to Indiana University. Scien-tists from both institutions will collaborate on research in cancer biology in the new facility.

Institutional borrowing capacity is a valuable resource that is actively managed in support of the institutional mission. Bonds, notes, and capital lease obligations totaled

2010, respectively.

On March 10, 2011, the university issued Consolidated Revenue Bonds, Series 2011A with a par amount of $16,040,000. The purpose of the issue was to provide

Garage Expansion on the Indianapolis campus.

The University’s ratings on debt obligations were reviewed and updated in December 2010. On December 21, 2010,

-lying rating of ‘Aaa’ (global scale) with a Stable Outlook on student fee bonds, student residence system, facility

-cates of participation. On December 16, 2010, Standard & Poor’s Ratings Services (S&P), raised its long-term rating and underlying rating from ‘AA’ with a positive outlook to ‘AA+’ with a stable outlook on student fee bonds, student

14

residence system, facility revenue bonds, consolidated

ECONOMIC OUTLOOK

The State of Indiana provides less than 20% of Indiana

-cial improvement for the state.

Unemployment, while still at recession levels, declined

the height of the recession. At the same time, state tax

fact, actual revenue collections exceeded forecast by $204 million. This improved revenue performance, combined with successful state expenditure cuts, improved the

reserves. These reserves increased from $831 million at

actual revenues were $204 million above forecast, revenues will need to increase by only 3.5% to achieve the level of revenue forecast for the year. The cushion provided by

needed due to the national economic slowdown experienced

Student enrollment for the university is projected to remain -

cial position of the university is favorable and management will continue to monitor state and national economic condi-

Cyberinfrastructure Building, IU Bloomington

15

Ae a e

Cash and cash equivalents $ 580,110 $ Accounts receivable, net 121,106 111,087 Current portion of notes and pledges receivable 13,176 Inventories 12,020 13,021 Short-term investments 83,036 46,735Securities lending assets 118,177 Other assets 33,376 34,265 Total current assets No c e a e Accounts receivable 12,327 13,445 Notes and pledges receivable 63,173 Investments 1,101,246 Capital assets, net 2,422,233 2,316,762 Total noncurrent assets 3,308,388 To al a e 4,556,576 4,280,207

e liabili ie

Accounts payable and accrued liabilities 231,074 Deferred revenue 156,708 Current portion of capital lease obligationsCurrent portion of long-term debt 48,808 60,848 Securities lending liabilities 118,177 Total current liabilities 554,715 No c e liabili ie Capital lease obligations 2,600 Notes payable 31,168 Assets held in custody for others 74,334 Deferred revenue 62,874 Bonds payable 848,205 Other long-term liabilities 60,313 58,550 Total noncurrent liabilities 1,042,860 1,077,731 To al liabili ie 1,597,575 1,603,340 N Invested in capital assets, net of related debt 1,621,228 1,555,422 Restricted for: Nonexpendable - endowments Expendable Scholarships, research, instruction and other 124,382 114,316 Loans 25,067 Capital projects 10,115 Debt service 288 6,300 Unrestricted 1,167,617 To al e a e 2,959,001 2,676,867 To al liabili ie a d e a e $ 4,556,576 $ 4,280,207

Statement of Net Assets

See accom anying notes to the nancial statements

16

17

Statement of Revenues, Expenses, and Changes in Net Assets

See accom anying notes to the nancial statements

Student fees $ 1,145,260 $ 1,088,373 Less scholarship allowanceFederal grants and contracts 344,642 318,646 State and local grants and contracts 17,074 23,830 Nongovernmental grants and contractsSales and services of educational units 64,475 Other revenue 181,640 Auxiliary enterprises (net of scholarship allowance of $21,151 in 2011 and $18,750 in 2010) 330,550 323,571To al o e a i e e e 2,003,416 1,933,283

1,731,042

Energy and utilities 68,534 64,031 TravelSupplies and general expense 430,712 Depreciation and amortization expense 130,538 125,715 To al o e a i e e e 2,579,131 2,493,131 To al o e a i lo (575,715) (559,848)N State appropriationsGrants, contracts, and other 120,035 Investment income 103,265 Gifts 104,814 Interest expense (33,155) (32,401)Ne o o e a i e e e 831,255 798,281

co e be o e o he e e e , e e e , ai , o lo e 255,540 238,433 Capital appropriations 3,005 Capital gifts and grants 14,565 17,323 Additions to permanent endowments 45 545 To al o he e e e 26,594 20,873

c ea e i e a e 282,134 259,306

Ne a e , be i i o ea 2,676,867 2,417,561

Ne a e , e d o ea $ 2,959,001 $ 2,676,867

18

19

Statement of Cash Flows

Student fees $ Grants and contracts 470,505 Sales and services of educational activities 60,755 Auxiliary enterprise charges 324,455 331,501 Other operating receipts 171,533 184,325 Payments to employees (1,710,221) (1,661,635)Payments to suppliers

(164,140) (154,558)Student loans collected 12,008 8,231 Student loans issued (2,667) (5,287)Ne ca h ed i o e a i ac i i ie (417,254) (369,350)

State appropriations 540,221 Nonoperating grants and contracts 120,035 Gifts and grants received for other than capital purposes 103,806 Direct lending receipts 615,100 584,784 Direct lending payments (615,866) (584,813)Ne ca h o ided b o ca i al a ci ac i i ie 763,296 729,931

Capital appropriations 3,005 Capital grants and gifts received 18,456 Purchase of capital assets (244,778)Proceeds from issuance of capital debt, including refunding activity 16,610 180,073 Principal payments on capital debt, including refunding activity (58,722)Principal paid on capital leases (1,265) (1,464)Interest paid on capital debt and leases (45,850)Ne ca h ed i ca i al a d ela ed a ci ac i i ie (303,733) (140,467)

Proceeds from sales and maturities of investments 3,642,358 Investment income 30,674 72,718 Purchase of Investments (3,806,524) (2,808,228)Ne ca h ed i i e i ac i i ie (133,492) (101,713)Ne i c ea e (dec ea e) i ca h a d ca h e i ale (91,183) 118,401 Cash and cash equivalents, beginning of year 671,293 552,892

a h a d ca h e i ale , e d o ea $ 580,110 $ 671,293

See accom anying notes to the nancial statements

20

Statement of Cash Flows

See accom anying notes to the nancial statements

R

Operating loss $ (575,715) $ Adjustments to reconcile operating loss to net cash used in operating activities: Depreciation and amortization expense 130,538 125,715 Loss on disposal of capital assets 3,675 4,487 Changes in assets and liabilities: Accounts receivable 2,185 Inventories 1,001 Other assets Notes receivable 4,427 2,722 Accounts payable and accrued liabilities 5,808 Deferred revenue 7 34,466 Assets held in custody for others 1,457 6,376 Other noncurrent liabilities 8,472 6,450 Ne ca h ed i o e a i ac i i ie $ (417,254) $ (369,350)

(continued from previous page)

21

Indiana University Notes to the Financial Statements June 30, 2011 and June 30, 2010

Accounting Policies

ORGANIZATION

Indiana University (university) is a state-supported insti-

students enrolled on seven campuses. Campuses are located in Bloomington, Indianapolis (IUPUI), Richmond (East), Kokomo, Gary (Northwest), South Bend, and New Albany

schools, colleges, and departments as part of the comprehen-sive reporting entity. The university was established by state legislative act, under Indiana Code Section IC 20-12-23, in 1838, changing the name of its predecessor, Indiana College, to Indiana University. The university’s governing body, the Trustees of Indiana University (trustees), is comprised of nine members charged by the Indiana General Assembly with policy and decision-making authority to carry out the programs and missions of the university. Six of the members are appointed by the Governor of Indiana, and three are

as exempt from federal income tax under Section 501(a) of the Internal Revenue Code, as an organization described in Section 501(c)(3), and also under Section 115(a). Certain revenues of the university may be subject to federal income tax as unrelated business income under Internal Revenue Code Sections 511 to 514.

A I O R NTATION

As a component unit of the state, the university presents

Accounting Standards Board (GASB) Statement No. 35, Basic Financial Statements—and Management’s Discussion and Analy-sis—for Public Colleges and Universities, reporting guidelines established by GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, and with account-ing principles generally accepted in the United States of America, as prescribed by GASB. The university reports on a consolidated basis, with a comprehensive, entity-wide presentation of the university’s assets, liabilities, net assets,

R ORTING NTIT

government, organizations for which the primary govern-

-ship with the primary government are such that exclusion

be misleading or incomplete, as required by GASB State-ment No. 14, he Financial eporting Entity As additionally

Determining Whether Certain Organizations Are Component Units, organizations

of the university are included in the reporting entity. The university evaluates potential component units for inclusion in the reporting entity based on these criteria.

I R T OM ON NT NIT

The Indiana University Foundation, Inc. (IU Foundation) is

the State of Indiana for the exclusive purpose of supporting the university by receiving, holding, investing, and admin-istering property and making expenditures to or for the

a component unit of the university according to the criteria

include discrete presentation of the IU Foundation by

in their original formats on separate pages.

reports under FASB standards, including FASB Statement No. 117, Financial Statements of ot-for-Pro t Organizations As such, certain revenue recognition criteria and presenta-

-ences. The IU Foundation distributed $102,174,000 and

IU Foundation can be obtained from: Indiana University

47402.

N OM ON NT NIT

In September 2008, the Trustees of Indiana University directed, by resolution, that the Indiana University Building

behalf of the university and designated that certain of the

-opment of university facilities by owning and leasing such facilities to the university on a lease purchase basis.

A I O A O NTING

by the university operating as a special-purpose govern-ment entity engaged in business-type activities. Accord-

the economic resources measurement focus and the accrual

22

basis of accounting. Revenues are recognized when earned and expenses are recorded when an obligation has been incurred. Eliminations have been made to minimize the “double-counting” of internal activities.

The university applies all applicable GASB pronounce-ments. In addition, the university has elected to apply only those Financial Accounting Standards Board (FASB) State-ments and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB)

accounting principles generally accepted in the United States of America requires management to make estimates

estimates.

A I A NT

The university considers all highly liquid investments with maturities of three months or less to be cash equivalents. The university invests operating cash in investments with varying maturities.

IN TM NT

Investments are carried at fair value, as quoted by the major securities markets. Realized and unrealized gains and losses are reported as a component of investment income in the Statement of Revenues, Expenses, and Changes in Net Assets.

A O NT R I A

Accounts receivable consist primarily of amounts due from students, grants and contracts, and auxiliary enterprises and are recorded net of estimated uncollectible amounts.

NOT R I A

Notes receivable consist primarily of student loan repay-ments due to the university.

A ITA A T

Capital assets are recorded at cost at the date of acquisi-tion or fair market value at the date of contribution in the case of gifts. The university capitalizes equipment with a cost of $5,000 or more and a useful life in excess of one year. Capital assets also include land improvements and infrastructure costing in excess of $75,000. Buildings and building renovations that increase the useful life of the building and with cost greater than or equal to the lesser of $75,000 or twenty percent of the acquisition cost of the existing building are capitalized. Intangible assets with a

cost of $500,000 or more are subject to capitalization. Art and museum objects purchased by or donated to the univer-sity are capitalized. Depreciation expense is computed using the straight-line method over the estimated useful lives

equipment, ten years for library books, ten to forty years for

years for buildings and building components. Useful lives for capital assets are established using a combination of the American Hospital Association guidelines, Internal Revenue Service guidelines, and documented university experience. Land and capitalized art and museum collections are not depreciated.

RR R N

Deferred revenue is recorded for amounts received for student tuition and fees and for certain auxiliary goods and services prior to year end, but which relate to the subse-

sponsors that have not yet been earned are also recorded as deferred revenue.

OM N AT A N

Liabilities for compensated absences are recorded for vacation leave based on actual earned amounts for eligible employees who qualify for termination payments. Liabilities for sick leave are recorded for employees who are eligible for and have earned termination payments for accumulated sick days upon termination or retirement.

N T A T

-ing in the following net asset categories:

Invested in capital assets, net of related debt: This component of net assets includes capital assets, net of accumulated depreciation and outstanding principal debt balances related to the acquisition, construction, or improvement of those assets.

Restricted net assets—nonexpendable: Nonexpendable restricted net assets are subject to externally imposed stipulations that the principal is to be maintained in perpetuity and invested for the purpose of producing present and future income, which may be either expended or added to principal. Such assets include permanent endowment funds.

Restricted net assets—expendable: Restricted expendable net assets are resources the university is legally obligated to spend in accordance with externally imposed restrictions.

Unrestricted net assets: Unrestricted net assets are not subject to externally imposed restrictions and are primar-ily used for meeting expenses for academic and general operations of the university.

23

When an expense is incurred for which both restricted and unrestricted resources are available, the university’s policy is to apply the most appropriate fund source based on the relevant facts and circumstances.

R N

nonoperating as follows:

Operating revenues: Operating revenues result from exchange transactions, such as student tuition and fees (net of scholarship discounts and allowances), govern-ment and other grants and contracts, and sales and services of auxiliary enterprises (net of scholarship discounts and allowances).

Nonoperating revenues: Nonoperating revenues include those derived from nonexchange transactions such as gifts and certain federal and state grants. Other nonop-

are relied upon for operations, such as state appropria-tions and investment income.

O AR I I O NT AN A O AN

Student tuition and fees and other student revenues are reported gross with the related scholarship discounts and allowances directly below in the Statement of Revenues, Expenses, and Changes in Net Assets. Scholarship

-ence between the stated charges for goods and services provided by the university and the amounts paid by students and/or third parties making payments on behalf of students.

Note 2—Deposits and Investments

O IT

The combined bank balances of the university’s demand

and 2010, respectively. The university had balances in excess of Federal Deposit Insurance Corporation limits in

and 2010, respectively. The balance in excess of FDIC limits in 2011 is subject to custodial credit risk. The 2010 balance,

of the limits of coverage by federal deposit insurance, were covered by the Public Deposit Insurance Fund, created to protect the public funds of the State of Indiana and its political subdivisions. The custodial credit risk for depos-its is the risk that, in the event of the failure of a deposi-

recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The university does not have a formal deposit policy for custodial credit risk.

IN TM NT

body for the invested assets of the university. Indiana Code 30-4-3-3 requires the trustees to “exercise the judgment and care required by Indiana Code 30-4-3.5”, the Indiana Uniform Prudent Investor Act That act requires the trustees to act “as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.” The trustees have the responsibility to assure the assets are prudently invested in a manner consistent with the university’s investment policy. The trustees have delegated the day-to-day responsibilities

Treasurer.

At June 30, 2011 and 2010, the university had investments and deposits, including endowment funds, as shown as follows:

_______________________________________________________________

(dollar amounts presented in thousands)

Fair ValueInvestment Type June 30, 2011 June 30, 2010Money market funds $ 570,718 $ 702,168Corporate bonds 310,373External investment pools 201,442 163,132 Government mortgage- backed securitiesGovernment bonds 133,040 Asset-backed securities 82,448Commercial mortgage-backed 63,133 52,811Short-term bills and notes 10,643Government agencies 41,448 47,722Nongovernment backed C.M.O.s 23,836 25,257Municipal/provincial bonds 7,576

Commercial paperVenture capital 3,023Real estate 2,260 3,165Mutual funds 1,667 1,132Index-linked government bonds 1,258 1,358All other (27,716)To al $ 1,764,392 $ 1,633,036

_______________________________________________________________

I R

The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of invest-ment or collateral securities that are in the possession of an

24

outside party. The university manages custodial credit risk through the types of investments that are allowed by investment policy. The university’s investments are not

-ment securities registered in the name of the university, investment securities loaned for collateral received, or other types of investments not exposed to custodial credit risk.

I R R

Interest rate risk is the risk that changes in interest rates

university’s policy for controlling its exposure to fair value losses arising from increasing interest rates is to constrain average portfolio duration within ranges of a target portfolio duration set for each portfolio of operat-ing fund investments. The portfolios may seek to enhance

within the allowable ranges.

The university had investments with the following maturities at June 30, 2011:___________________________________________________________________________________________________________(dollar amounts presented in thousands)

Fair Value Investment Maturities (in years)

Investment Type June 30, 2011 Less than 1 1–5 6–10 More than 10

Investments with maturity dateCorporate bonds $ 35,128 $ 202,041 $ 102,560Government mortgage backed securities 43,600 24,628 122,205Government bonds 133,040 54,746 32,360Asset backed securities 11,174 11,708Commercial mortgage–backed 63,133 – –Short–term bills and notes – – –Government agencies 41,448 14,237 20,286 1,733 Non–government backed C.M.O.s 23,836 – 1,258 18,642 Municipal/provincial bonds 371 4,312 1,281 6,127

4,185 5,447 – –Commercial paper – – –Index–linked government bonds 1,258 – – – 1,258

6,823 3,044 (658)To al i e e i h a i da e 1,018,754 171,502 345,671 206,515 295,066

Investments with undetermined maturity date

Money market funds 570,718 570,718 – – – External investment pools 201,442 201,442 – – – Venture capital – – – Real estate 2,260 2,260 – – – Mutual funds 1,667 1,667 – – – All other – – – To al i e e i h de e i ed a i da e 745,638 745,638 – – –To al $ 1,764,392 $ 917,140 $ 345,671 $ 206,515 $ 295,066

___________________________________________________________________________________________________________

25

The university had investments with the following maturities at June 30, 2010:_____________________________________________________________________________________________________________(dollar amounts presented in thousands)

Fair Value Investment Maturities (in years)

Investment Type June 30, 2010 Less than 1 1–5 6–10 More than 10

Investments with maturity dateCorporate bonds $ 310,373 $ 35,012 $ 132,651 $ 83,053Government bonds 2,482 57,106 65,183Government mortgage backed securities 8,575 1,827 18,818 70,183Asset backed securities 82,448 Commercial mortgage–backed 52,811 - 765 50,754Government agencies 47,722 1,651 41,567 3,003 1,501 Non–government backed C.M.O.s 25,257 – 1,524 821 Short–term bills and notes 10,643 10,643 – – –

504 – –Municipal/provincial bonds 7,576 1,012 Commercial paper – – –Index–linked government bonds 1,358 – – – 1,358

41 3,018To al i e e i h a i da e 808,427 70,613 306,805 185,836 245,173Investments with undetermined maturity dateMoney market funds 702,168 702,168 – – – External investment pools 163,132 163,132 – – – Real estate 3,165 3,165 – – – Venture capital 3,023 3,023 – – – Mutual funds 1,132 1,132 – – – All other (48,011) (48,011) – – – To al i e e i h de e i ed a i da e 824,609 824,609 – – –To al $ 1,633,036 $ 895,222 $ 306,805 $ 185,836 $ 245,173

_____________________________________________________________________________________________________________

26

R

Credit risk is the risk that an issuer or other counterparty to

average credit quality of each portfolio of university

At June 30, 2011 and 2010, university investments had debt securities with associated credit ratings as shown below:_____________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

Credit Quality RatingFair Value

June 30, 2011Percentage of

Total Pool Fair Value

June 30, 2010Percentage of

Total PoolAAA $ 343,755 35.65%AA 140,345 46,763 2.86%A 124,023 BBB 114,146 6.47% 114,622 7.02%BB 62,705 3.55% 44,574 2.73%B 1.14%CCC 0.47% 7,707 0.47%CC 625 0.04% – – D 0.11% – –Not Rated 51.52%To al $ 1,764,392 100.00% $ 1,633,036 100.00%

_____________________________________________________________________________________________________________

R

the magnitude of a government’s investment in a single issuer. The university’s investment policy requires that

securities of any single issuer shall be limited to 3.5% of the market value in a particular manager’s portfolio. U.S. Government and U.S. governmental agency securities are exempt from this policy requirement.

R

Foreign currency risk is the risk that changes in exchange

investments and deposits. The university’s policy for controlling exposure to foreign currency risk is to constrain investments in non-U.S. dollar denominated debt to 25% of

manager’s guidelines. Minimal foreign currency exposure could occur if one of the university’s investment managers purchases non-U.S. dollar holdings and does not hedge the currency. As of June 30, 2011, and June 30, 2010, the univer-sity’s investments were not exposed to foreign currency risk.

N O M NT

Endowment funds are managed pursuant to an Invest-ment Agency Agreement between the Trustees of Indiana University (trustees) and the IU Foundation, which

operating funds investments must be at least ’AA-/Aa3‘ for Defensive Managers; ’A/A2‘ for Core Plus Managers, or as

delegates investment management responsibilities to the IU Foundation. Indiana Code 30-2-12, Uniform Management of Institutional Funds, sets forth the provisions governing the investment of endowment assets and the expenditure of endowment fund appreciation. The code requires that the trustees and their agents act in good faith and with the care a prudent person acting in a like position would use under similar circumstances, with respect to the investment of endowment assets. The code also sets forth provisions governing the expenditure of endowment fund appreciation, under which the trustees may authorize expenditure, consis-tent with donor intent. The trustees may, at their discre-tion, direct all or a portion of the university’s endowment funds to other investments, exclusive of the IU Foundation’s investment funds. The spending policy of the trustees is to distribute 5% of the twelve quarter rolling average of pooled fund values. Funds held by endowments, managed by the IU Foundation, are used to acquire pooled shares.

Endowment funds have a perpetual investment horizon, and as appropriate, may be invested in asset classes with longer term risk/return characteristics, including, but not limited to stocks, bonds, real estate, private placements, and alternative investments. The Indiana University Endow-ments (endowments) are managed pursuant to an Invest-ment Agency Agreement between the trustees and the IU Foundation dated November 14, 2005, which delegated investment management responsibilities to the IU Founda-tion, subject to the university’s management agreement with

27

the IU Foundation. Endowment assets may be invested in pooled funds or in direct investments, or a combination of

quality stocks and bonds. Additional asset classes, such as absolute return, private equity, and real asset investments, may be included when it is reasonable to expect these investments will either increase return or reduce risk, or both. Participation in the pooled investments is achieved by owning units of the Pooled Long-Term Fund and considered an external investment pool to the university. At June 30, 2011, all endowments held with the IU Founda-tion were invested in pooled funds.

I R R

The IU Foundation’s investment policy stipulates that the Pooled Short-Term Fund be invested in securities that typically mature within one year and each investment

benchmark.

R

The IU Foundation’s investment policy stipulates that the Pooled Short-Term Fund commercial paper be rated ‘A1/

-

For high-yield securities, the weighted average credit

R

The IU Foundation’s investment policy stipulates that the Pooled Short-Term Fund, with the exception of U.S. Treasuries and Agencies, or accounts collateralized by

-cates of Deposit, Bankers’ Acceptances, and Repurchase Agreements to $10,000,000 per issuer and money market funds and short term bond funds to $50,000,000 per fund.

manager selection, investment style, and asset type to avoid any disproportionate risk related to any one indus-try or security.

RI ATI

arrangement between the university and another party. The value of a derivative or the cash it provides is based on changes in market prices, such as interest rates or commodity prices, in a separate transaction or agreement.

Derivatives are entered into for at least four reasons: As an investment

To lower borrowing costs

The university holds derivative instruments, such as futures, forwards, options, and swaps in its portfolio for investment purposes only. The fair value of derivatives held by the

June 30, 2010, respectively. The notional market value was

2010, respectively. The change in fair value was $62,000 and

R , I R R R

Derivative transactions involve, to varying degrees, credit risk, interest rate risk, and foreign currency risk. Credit risk is the possibility that a loss may occur because a party to a transac-tion fails to perform according to terms. Interest rate risk is the possibility that a change in interest rates will cause the value

value of a transaction. The credit risk, interest rate risk, and foreign currency risk associated with derivatives, the prices of

strict limits as to the types, amounts, and degree of risk that investment managers may undertake.

Note 3—Securities Lending

State statutes and policy of the Trustees of Indiana University permit the university to lend securities to broker-dealers and other entities (borrowers) for collateral that will be returned for the same securities in the future. The university’s custodial bank manages the securities lending program and receives

credit as collateral. Noncash collateral cannot be pledged or sold unless the borrower defaults. Cash collateral is invested in a short-term investment pool. Cash collateral may also be invested separately in “term loans,” in which case the invest-ment term matches the loan term. Maintenance margins for

can be terminated on demand by either the university or the borrowers. Cash received as securities lending collateral was

-tively, and is recorded as an asset and corresponding liability on the university’s Statement of Net Assets. The university had securities involved in loans with fair value of $115,778,000

risk is calculated as the aggregate of the lender’s exposure to individual borrowers or on individual loans. Although collat-eralized, the university would bear risk if the cash collateral is impaired.

28

Note 4—Accounts Receivable

Accounts receivable consisted of the following at June 30, 2011 and 2010:_____________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

June 30, 2011 June 30, 2010

Student accounts $ 35,066

Auxiliary enterprises and other operating activities 51,883

State appropriations -

Federal, state, and other grants and contracts 21,760 21,083

Capital appropriations and gifts 4,242

Other 10,580 7,343

e acco ecei able, o 130,585 120,563

Less allowance for uncollectible accounts

e acco ecei able, e 121,106 111,087

Auxiliary enterprises and other operating activities 12,327 13,445

No c e acco ecei able $ 12,327 $ 13,445_____________________________________________________________________________________________________________________________

29

Note 5—Capital Assets______________________________________________________________________________________________________________________________

Fiscal year ended June 30, 2011

(dollar amounts presented in thousands)

Balance June 30, 2010 Additions Transfers Retirements

BalanceJune 30, 2011

Assets not being depreciated: Land $ 53,183 $ 1,256 $ – $ – Art & museum objects 74,215 4,844 – – Construction in progress 168,155 100,254 (113,846) 223 154,340Total capital assets not being depreciated 106,354 (113,846) 223 287,838Other capital assets:

Infrastructure 155,243 4,601 231 – 160,075 Intangibles – – – Land improvements 30,268 3,074 – Equipment 28,805 Library books 211,716 23,405 – 16,813 218,308 Buildings 71,443 3,061,556Total other capital assets 134,018 113,846 65,441Less accumulated depreciation for: Infrastructure 4,015 – – 126,384 Intangibles – 336 – – 336 Land improvements – – 11,266 Equipment 275,665 33,412 – 274,166 Library books 21,511 – 16,813 Buildings 1,161,877 – 1,221,767

Total accumulated depreciation, other capital assets 1,668,761 130,537 – 61,300

a i al a e , e $ 2,316,762 $ 109,835 $ – $ 4,364 $ 2,422,233

30

Fiscal year ended June 30, 2010

(dollar amounts presented in thousands)

Balance June 30, 2009 Additions Transfers Retirements

BalanceJune 30, 2010

Assets not being depreciated: Land $ 53,057 $ 126 $ – $ – $ 53,183 Art & museum objects 73,672 543 – – 74,215 Construction in progress 224,840 (186,643) 1,030 168,155Total capital assets not being depreciated 131,657 (186,643) 1,030Other capital assets:

Infrastructure 3,284 – 155,243 Land improvements 26,648 3,438 182 – 30,268 Equipment 17,348 Library books 207,621 23,430 – 211,716 Buildings 2,670,587 57,361Total other capital assets 3,421,558 118,322 186,643 36,553Less accumulated depreciation for:

Infrastructure 118,344 4,025 – – Land improvements – – Equipment 254,842 34,020 – 275,665 Library books – Buildings 65,245 – 426 1,161,877Total accumulated depreciation, other capital assets 1,576,004 125,715 – 1,668,761

a i al a e , e $ 2,197,123 $ 124,264 $ – $ 4,625 $ 2,316,762______________________________________________________________________________________________________________________________

Note 6—Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following at June 30, 2011 and 2010:

______________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

June 30, 2011 June 30, 2010

Accrued payroll $ 40,663 $ 24,414

Accrual for compensated absences 41,585 42,608

Interest payable 17,617 24,746

Vendor and other payables

To al acco a able a d acc ed liabili ie $ 229,753 $ 231,074

______________________________________________________________________________________________________________________________

31

Note 7—Other Liabilities

_________________________________________________________________________________________________________________

Fiscal year ended June 30, 2011

(dollar amounts presented in thousands)

Balance June 30, 2010 Additions Reductions

Balance June 30, 2011 Current

Bonds, notes, and capital leases payable $ 62,120 $ 50,077

Other liabilities:

Deferred revenue 7 - 214,200 156,708

Assets held in custody for others 74,884 1,424 - 76,308 516

Compensated absences 64,023 21,111 41,586 Other 37,135 5,655 6,680 36,110 -

Total other liabilities 26,025

To al o c e liabili ie $ 1,334,205 $ 45,687 $ 88,145 $ 1,291,747 $ 248,887

Fiscal year ended June 30, 2010

(dollar amounts presented in thousands)

Balance June 30, 2009 Additions Reductions

Balance June 30, 2010 Current

Bonds, notes, and capital leases payable $ 815,782 $ 181,823 $ 53,635

Other liabilities:

Deferred revenue 34,466 -

Assets held in custody for others 68,486 - 74,884 550

Compensated absences 54,281 64,023 42,608 Other 44,128 5,246 37,135 -

Total other liabilities 346,622 77,031 33,418

To al o c e liabili ie $ 1,162,404 $ 258,854 $ 87,053 $ 1,334,205 $ 256,474______________________________________________________________________________________________________________________________

Note 8 — Bonds and Notes Payable

The university is authorized by acts of the Indiana General Assembly to issue bonds, notes, and other forms of indebt-

that include academic and administrative facilities, research facilities on the Bloomington and Indianapolis campuses, athletic facilities, parking facilities, student housing, student union buildings, and energy savings projects. The outstand-ing bond and note indebtedness at June 30, 2011 and 2010,

indebtedness included principal outstanding at June 30, 2011 and 2010, for bonds issued under Indiana Code (I.C.) 21-34-6 (Student Fee debt) of $464,428,000 and $507,317,000,

respectively, and for bonds issued under IC 21-35-3 -

tively. The Student Fee Bonds have an additional accreted value of outstanding capital appreciation bonds associated with them of $24,142,000 and $37,113,000, respectively. The outstanding bond series include serial, term, and capital appreciation bonds with maturities extending to June 1, 2038.

On a biennial basis, the Indiana General Assembly autho-

the purpose of reimbursing a portion of the debt service

32

payments on bonds issued under I.C. 21-34-6 for certain academic facilities. Such academic facilities include class-rooms, libraries, laboratories, utility infrastructure, and other academic facilities as designated by the Indiana

referred to as “fee replacement” appropriations, and are received from the State of Indiana on a semi-annual basis.

basis because the Constitution of the State of Indiana -

quent General Assemblies as to the continuation of any appropriated funds. The State of Indiana has fully funded all fee replacement obligations established by prior General Assemblies since the State began authorizing fee replace-ment appropriations 40 years ago. The outstanding principal balances which are eligible for fee replacement appro-

and $447,043,000, respectively. As of June 30, 2011, debt

appropriations.

In addition to serial and term bonds, the university has issued capital appreciation bonds (CAB). A CAB is a long-term municipal security, on which the investment return on an initial principal amount is reinvested at a stated compounded rate until maturity, at which time the inves-tor receives a single payment representing both the initial principal amount and the total investment return. A CAB

pays no current interest, but accretes in value from the date of issuance to the date of maturity. At maturity, the origi-nal par amount plus all of the accreted interest is payable. Total debt service payments to maturity, as of June 30, 2011, include $42,625,000 of CAB payments, of which $16,325,000 is eligible for fee replacement appropriations. Total debt service payments to maturity, as of June 30, 2010, include

eligible for fee replacement appropriations.

Consolidated Revenue Bonds (CRB) are unsecured obliga-tions of the university that carry a promise of repayment

designated housing facilities, parking facilities and other auxiliary facilities along with certain research revenues and athletic revenues, and second, from other legally available funds of the university.

The Indiana University Building Corporation (IUBC) is an

that was formed by the Trustees of Indiana University in 2008. The sole purpose of this entity is to assist the univer-

by owning and leasing such facilities to the university on

payments between the university as lessee and IUBC as lessor are included in the outstanding indebtedness table

As of June 30, 2011 and 2010, outstanding indebtedness from bonds and notes is summarized as follows:_____________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

Bonding Authority Interest Rates Final Maturity

Year Ended

Principal Outstanding

At June 30, 2011

Principal Outstanding

At June 30, 2010

Indiana Code 21-34-6 (Bonds: Student Fee Debt) 2.00 to 6.40% 2033 $ 464,428 $ 507,317

Indiana Code 21-35-3 (Bonds: Revenue Debt) 2.00 to 5.64% 2038 375,630

Indiana Code 21-34-10-7 (Notes: Energy Savings Debt) 2018 3,153 3,637

Participation) 2030 28,015

Subtotal bonds and notes payable 871,226

Add unamortized bond premium 28,605 30,622

Less deferred charges (4,310)

To al bo d a d o e a able $ 896,002 $ 940,221_____________________________________________________________________________________________________________________________

33

As of June 30, 2011, the university does not have any variable rate bonds or notes outstanding. The principal and interest requirements to maturity for bonds and notes are as follows:_____________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

Fiscal YearEnded June 30

Bond Principal

Note Principal

Total Principal Bond Interest

Note Interest

Total Interest

Total Debt Service Payments

2012 $ 44,783 $ 46,677 $ 48,812 $ 1,434 $ 50,246

2013 45,185 47,145 42,217 43,586

2014 47,415 2,018 40,260 1,304 41,564

2015 50,804 36,385 1,232 37,617

2016 51,221 53,158 34,114 1,155 88,427

2017 - 2021 264,664 4,506 128,605

2022 - 2026 7,355 2,345 67,234

2027 - 2031 117,005 4,640 121,645 23,363 530 145,538

2032 - 2036 33,415 - 33,415 5,403 - 5,403 38,818

2037 - 2038 4,510 - 4,510 341 - 341 4,851

To al $ 840,058 $ 31,168 $ 871,226 $ 419,883 $ 13,875 $ 433,758 $ 1,304,984 _________________________________________________________________________________________________________________

In prior years, the university has defeased several bond issues either with cash or by issuing new debt. United States Treasury obligations or federal agency securities have been

-est payments when due, through the maturity or call dates of the defeased bonds. These securities have been depos-ited in irrevocable trusts as required to defease the bonds. The defeased bonds and the related trusts balances are not

only previously defeased bonds that remain outstanding are

a call date of August 1, 2011.

The ARRA allows certain tax advantages to state and local governmental entities when such entities issue qualifying taxable obligations, referred to as Build America Bonds (BABs). Issuers of BABs are eligible to receive subsidy payments from the U.S. Treasury equal to 35 percent of the corresponding interest payable on the related BABs. The BABs provisions in the ARRA expired as of January 1, 2011. The obligation of the U.S. Treasury to make subsidy

maturity date of BABs that are issued prior to the expiration of the program. Bond and note interest shown above has not been reduced by any federal interest subsidy due on taxable BABs. The total federal interest subsidy scheduled to be received over the life of the BABs debt outstanding as of June 30, 2011 is $37,632,000.

On March 10, 2011, the university issued Consolidated Revenue Bonds, Series 2011A with a par amount of

-ing for the construction of the Sports Complex Garage Expansion on the Indianapolis campus. The true interest cost for the bonds is 4.07%.

34

Note 9—Lease Obligations

The university leases certain facilities. The majority of the facility leases include renewal options and some provide for escalation of rent based on changes in operating costs. Some leases are in substance lease-purchases and, as such, are recorded as capital lease obligations.

Scheduled lease payments for the years ending June 30 are as follows: ____________________________________________________________

(dollar amounts presented in thousands)

Capital Operating2012 $ 1,436 $ 12,710

2013 1,237 8,280

2014 7,267

2015 258 6,542

2016 57 6,165

2017-2021 –

2022-2026 – 1,604

2027-2028 – 353

Total future minimum payments 3,647 $ 48,822 Less: interestTo al i ci al a e o a di $ 3,338

____________________________________________________

Note 10—Federal Obligations Under Student Loan Programs

Campus based student loans are funded by new allocations received from the federal government, as well as principal and interest collected from previous student loan recipients. The federal government advanced $705,000 and $242,000

years ended June 30, 2011 and 2010, respectively.

Liabilities at June 30, 2011 and 2010, for loan programs were as follows:_____________________________________________________________

(dollar amounts presented in thousands)

June 30, 2011 June 30, 2010Current portion of assets held in custody for others $ 516 $ 550No c e liabili ie Federal share of interest 37,407

Perkins loans

Health professions loans 16,617 16,346

Nursing loans 1,344 1,206Total noncurrent portion of assets held in custody for others 74,334To al a e held i c od o o he $ 76,308 $ 74,884

_____________________________________________________________

Note 11—Risk Management

The university is exposed to various risks of loss, includ-ing torts, theft, damage or destruction of assets, errors or omissions, job-related illnesses or injuries to employees, and health care claims on behalf of employees and their dependents. The university manages these risks through a combination of risk retention and commercial insurance, including coverage from internally maintained funds as well as from a wholly-owned captive insurance company, Old Crescent Insurance Company (OCIC). The university is self-funded for damage to buildings and building contents for

per occurrence covered by OCIC, with commercial excess property coverage above this amount. The university is self-funded for comprehensive general liability and automo-

with supplementary commercial liability umbrella policies. The university has a malpractice and professional liability policy in the amount of $250,000 for each claim and $750,000 annually in aggregate provided by OCIC. The university is

-tion claim. Excess commercial coverage for up to $1,000,000 is in place for employer liability claims. Worker’s compen-sation claims above $750,000 are subject to statutory limits.

The university has four health care plans for full-time appointed employees, one of which is also available to retirees not eligible for Medicare. All of the employee plans are self-funded. The university records a liability for incurred but unpaid claims for university-sponsored, self-funded health care plans. This liability is estimated to be

35

no more than 15% of the paid self-funded claims during the

2011 and 2010, respectively. In addition, a potential claims

30, 2011 and 2010.

Separate funds have been established to account for the liability of incurred but unpaid health care claims, as well as

organizational units of the university are charged fees based on estimates of the amounts necessary to pay health care coverage costs, including premiums and claims.

Note 12—Retirement Plans

The university provided retirement plan coverage to 18,645

respectively, in addition to contributing to the Federal Insur-ance Contributions Act (FICA) as required by law.

I R

The university contributes to the Indiana Public Employees’

an annuity savings account provision. PERF administers the multiple-employer public employee retirement plans, which

-ries. All support, technical, and service employees with at least a 50% full-time equivalent (FTE) appointment partici-

university employees covered by this retirement plan as of June 30, 2011 and 2010, respectively. State statutes authorize the university to contribute to the plan and govern most

consists of the pension and an annuity savings account, both of which are funded by employer contributions. The annuity savings account consists of contributions set by state statute at three percent of compensation plus the earnings credited to members’ accounts. The university has elected to make the contributions on behalf of the members. PERF issues

statements and required supplementary information for the plan as a whole and for its participants. This report may be obtained by writing the Public Employees Retirement Fund, One North Capitol, Suite 001, Indianapolis, IN 46204, by calling 1-888-526-1687, or reviewing the Annual Report online at www.in.gov/inprs/annual reports.htm.

Contributions made by the university totaled $21,404,000

respectively. This represented a 7.0% and 6.5% university

2011 and 2010, respectively, and a 3% university contribution for the annuity savings account provisions each year.

R A

The contribution requirements of plan members for PERF are established by the Board of Trustees of PERF. The university’s annual pension cost with related information, as provided by the actuary, is presented below.

The employer contributions required by the funding policy

the amortization of unfunded liabilities. The amortization method and period are level dollar closed over 30 years. The actuarial cost method is entry age normal cost. The employer required contribution is determined using an asset smoothing method. The actuarial valuation date is

Actuarial assumptions include: (a) an investment rate of return of 7.25%, (b) projected salary increases of 4%, and (c) a 1% cost of living increase granted in each future year, applying to current and future retirees.____________________________________________________________

(dollar amounts presented in thousands)

Fiscal Year1 Ended June 30,

2010

Fiscal Year Ended June 30,

2009Annual required contribution $ $ 13,330Interest on net pension obligation (312)

Adjustment to annual required contribution 355 330Annual pension cost 14,742 13,370Contributions made (14,016) (13,681)Increase/(decrease) in net pension obligation 726 (311)Net pension obligation, beginning of year (4,307)Ne e io obli a io , e d o ea $ (3,581) $ (4,307)

1Actuarial data for 2011 not available at the time of this report

(dollar amounts presented in thousands)

Fiscal Year Ended

Annual Pension

Cost (APC)2

Percentage of APC Net Pension

ContributedNet Pension Obligation

June 30, 2008 107% 13,370 102% (4,307)

June 30, 2010 14,742 (3,581)2Does not re ect costs a ributable to the university’s 3 de ned contribution bene t See Indiana Public Employees’ Retirement Fund above_____________________________________________________________

36

A

at least 50% FTE are covered by the IU Retirement Plan. This

contribution levels. The university contributed $66,860,000

IU Retirement Plan. The university contributed $21,804,000

-ments for the IU Retirement Plan. Under this plan, 8,504 and 8,810 employees directed university contributions to TIAA-CREF as of June 30, 2011 and 2010, respectively. In addition, 4,138 and 3,635 employees directed university contributions to Fidelity Investments as of June 30, 2011 and 2010, respectively.

In addition to the above, the university provides early retire-

employees Grade 16 and above. There were 1,173 and 1,215 active employees on June 30, 2011 and 2010, respectively, covered by the IU Supplemental Early Retirement Plan

IRC 401(a), with participant accounts at TIAA-CREF and

30, 2011 and 2010, respectively. The same class of employ-

Retirement Plan, a combination of IRC Section 457(f) and Section 403(b) provisions. The 18/20 Retirement Plan allows this group of employees to retire as early as age 64, provided the individual has at least 18 years of participation in the IU Retirement Plan and at least 20 years of continuous

2011, the university made total payments of $33,153,000 to 386 individuals receiving 18/20 Retirement Plan payments.

receiving 18/20 Retirement Plan payments.

-tion for the plan as a whole and for its participants. This report may be obtained by writing the Teachers Insurance and Annuity Association/College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017-3206.

information for the plan as a whole and for its participants. This report may be obtained by writing Fidelity Invest-

I R R A

The university has established an early retirement plan for eligible employees to accommodate IRS requirements and as authorized by the Trustees of Indiana University. This plan is called the IU Replacement Retirement Plan. It is a single-

Trust and recordkeeping activities are outsourced to the TIAA-CREF Trust Company. As of June 30, 2011 and 2010,

-

with no employee contributions. These amounts represent 100% of the funding policy contribution.

The following schedule shows the funding policy contribu-

Retirement Plan as provided by the actuarial valuation

ended June 30, 2010, and prepared as of July 1, 2008, for the

______________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

Fiscal Year EndedJune 30, 2011

Fiscal Year EndedJune 30, 2010

Fiscal Year EndedJune 30, 2009

$ 808

Amortization of unfunded actuarial accrued liabilities

767 710 473

Interest 102 110

di olic co ib io $ 1,677 $ 1,479 $ 1,263______________________________________________________________________________________________________________________________

37

_____________________________________________________________________________________________________________________________

meet the following eligibility requirements: 18 years of participation in the IU Retirement Plan 15% level, at least 20 years of continuous full-time university service, and at least 64 years of age. This group of employees is eligible to receive monthly payments based on a hypothetical monthly annuity amount at age 70, up to the amount of terminal base salary, calculated as the average budgeted base salary for

-ment. The 18/20 Plan was adopted by the Trustees of Indiana University. The university provides medical care coverage to individuals with retiree status and their eligible dependents. The cost of the coverage is borne fully by the individual. However, retiree medical care coverage is implicitly more expensive than active-employee coverage, which creates an implicit rate subsidy. The university provides retiree life

employees with retiree status. The health and life insurance plans have been established and may be amended under the authority of the trustees. The Plan does not issue a stand-

The contribution requirements of plan members and the university are established and may be amended by the trustees. The university contribution to the 18/20 Plan and

requirements. Plan members do not make contributions. The medical plans are self-funded and each plan’s premiums are updated annually based on actual claims. Retirees receiving

The university contributed $52,512,000 and $52,613,000 to

2011 and 2010, respectively.

Actuarial assumptions include a 6.5% asset rate of return

June 30, 2011, and an 8% asset rate of return and future

year ended June 30, 2010. Liabilities are based on the projected unit credit method. The actuarial value of assets is equal to the fair value on the valuation date adjusted for employer contributions receivable. Actuarial assumptions of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occur-rence of future events including future employment and mortality, and are based on the substantive plan provisions.

Additional multiyear trend information regarding the funding progress of the IU Replacement Retirement Plan is

statements.

-tion for the plan as a whole and for its participants. This report may be obtained by writing the Teachers Insurance and Annuity Association/College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017-3206.

for retired employees. The IU 18/20 Plan, Medical, and -

ment purposes as a consolidated plan (the Plan) under the

Plans (OPEB) required by GASB Statement No.45, Account-ing and Financial Reporting by Employers for Postemployment Bene ts Other Than Pensions The Plan is a single-employer

(dollar amounts presented in thousands)

Actuarial Valuation Date July 1, 2010 July 1, 2009 July 1, 2008

Actuarial accrued liability (AAL) $ 17,713 $ 16,750

Actuarial valuation of plan assets 11,541

Unfunded actuarial liabilityActuarial value of assets as a percentage of (AAL) (funded ratio)

53.7% 53.2% 66.6%

Annual covered payroll $ 8,643 $ 8,446 $ 8,612

Ratio of unfunded actuarial liability to annual covered payroll 115.2%

_____________________________________________________________________________________________________________________________

38

A O N O O

The university’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC repre-sents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any

______________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

Actuarial Valuation

Date

Actuarial Value of Assets

(a)

Actuarial Accrued Liability (AAL)

(b)

Unfunded Actuarial Accrued

Liability (UAAL) (b) - (a)

Funded Ratio (a/b)

Covered Payroll

(c)

UAAL as Percentage of

Covered Payroll ((b-a) / c)

July 1, 2010 – 0.0% 46.1%

– $ 443,276 $ 443,276 0.0% 45.8%______________________________________________________________________________________________________________________________

______________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)Fiscal Year Ended

June 30, 2011Fiscal Year Ended

June 30, 2010Annual required contribution (ARC)/Annual OPEB cost $ 58,166

Less employer contributions 52,512 52,613

Increase in OPEB obligation 5,654 5,246

Net OPEB obligation, beginning of year 8,657

Net OPEB obligation, end of year

e ce a e o a al O co co ib ed 90.28% 90.93%______________________________________________________________________________________________________________________________

As of June 30, 2011, the most recent actuarial valuation date, the Plan was unfunded. The schedule of funding progress is below:

unfunded actuarial liabilities (or funding excess) over a

The following table shows the university’s annual OPEB cost for the year, the amount actually contributed to the plan, and the university’s net OPEB obligation as provided by the

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts deter-mined regarding the funded status of the Plan and the annual required contributions of the university are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to

-mation about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial

A M A

based on the substantive plan (the Plan as understood by the university and plan members) and include the types

university and plan members to that point. The actuarial methods and assumptions used include techniques that

actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

The projected unit credit cost method was used in the June 30, 2011 actuarial valuation. The actuarial assumptions include a 4.5 percent investment rate of return, which is

39

a blended rate of (a) the expected long-term investment returns on plan assets and (b) the university’s investments which is calculated based on the funded level of the Plan at June 30, 2011; and an annual healthcare cost trend rate that

Actuarial Accrued Liability is being amortized over 25 years using level dollar amounts on an open group basis.

b. redirect positions to focus on higher priorities; and c. avoid or minimize future involuntary reductions in personnel.

separating employees:

1. Income Replacement Payment: A lump sum payment equal to 10-months pay for tenured faculty, clinical faculty, and librarians and equal to 6-months pay for

2. Health Reimbursement Account (HRA): Five years of annual contributions to an account that reimburses

employees for some healthcare expenses, such as premiums, deductibles, and copays. These annual HRA contributions will be based on the employee’s current medical plan enrollment, from $6,000 for Employee Only coverage to $14,500 for Family coverage; with a reduction to $5,000 annually at Medicare age (65). 3. Medical Coverage until Medicare Age (65): Continua- tion in an IU-sponsored medical plan until age 65, by paying the full premium. (Employees with IU Retiree Status may participate in a post-65 Medicare supple- ment medical plan.)

-ment payments. The actuarial accrued liability associated

Note 15—Related Organization

Foundation, of which a majority of the board of directors is appointed by, or serve by virtue of position with, Indiana University. Riley Children’s Foundation net assets were $284,848,000 and $240,011,000 at June 30, 2011 and 2010, respectively. Riley Children’s Foundation net assets are not

40

Note 16—Functional Expenses

___________________________________________________________________________________________________________________________

Fiscal year ended June 30, 2011 (dollar amounts presented in thousands)

Natural Classi cation

FunctionalClassi cation

Compensation &

Bene ts UtilitiesSupplies & Expenses

Scholarships &

Fellowships Depreciation Travel TotalInstruction $ 818,630 $ 735 $ 100,123 $ – $ 15,041

Research 25 – 6,145 252,862

Public service 416 3,527 – 3,760

Academic support 57 33,312 3,322 – 5,128 241,255

Student services 70,135 10 20,554 – 1,424

Institutional support 117,171 12,343 3,585 – 1,876 135,573

Physical plant 75,363 62,873 56,336 6 –

Scholarships & fellowships 12,056 – 1,026 – 118

Auxiliary enterprises 3,820 – 6,578 287,031

Depreciation – – – – 130,538 – 130,538

To al o e a i e e e $ 1,731,042 $ 68,534 $ 443,499 $ 165,299 $ 130,538 $ 40,219 $ 2,579,131

Fiscal year ended June 30, 2010 (dollar amounts presented in thousands)

Natural Classi cation

FunctionalClassi cation

Compensation &

Bene ts UtilitiesSupplies & Expenses

Scholarships &

Fellowships Depreciation Travel TotalInstruction $ 780,546 $ 320 $ 101,417 $ –

Research 152,063 71,210 – 5,603 231,873

Public service 85,801 430 51,474 3,522 – 3,576 144,803

Academic support 28 – 4,445

Student services 75,254 13 28,055 – 1,315 106,116

Institutional support 453 1,405 1,704 – 124,452

Physical plant 73,487 4 – 128 185,180

Scholarships & fellowships – 535 120,065 –

Auxiliary enterprises 84,756 5,113 – 6,227

Depreciation – – – – 125,715 – 125,715

To al o e a i e e e $ 1,684,964 $ 64,031 $ 430,712 $ 150,779 $ 125,715 $ 36,930 $ 2,493,131____________________________________________________________________________________________________________________________

41

Note 17—Segment Information

alone entity for which one or more bonds are outstanding, with a revenue stream pledged in support of the debt. The primary source of repayment of these bonds is pledged net income from certain parking and housing opera-tions, including campuses for which bonds are no longer outstanding. Facilities Revenue Bonds carry a pledge of net income from the Parking System. Student Residence System Bonds carry a pledge of net income from the Student Residence System. The university has Facilities Revenue Bonds and Student Resident System Bonds outstanding

related to the following auxiliary enterprise activities:

faculty, and the general public.

housing primarily to students.

____________________________________________________________________________________________________________________________

(dollar amounts presented in thousands)

o de ed a e e o Ne A eParking Operations Housing Operations

June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010

Assets

Current assets $ 28,082 $ 112,002 $ 135,885

Capital assets, net 74,705 168,011 127,261

To al a e 119,616 102,787 280,013 263,146

Liabilities

Current liabilities 6,263 5,544 10,377 6,578

Noncurrent liabilities 64,213 52,571 116,431 121,112

To al liabili ie 70,476 58,115 126,808 127,690

Net assets

Invested in capital assets, net of related debt 26,505 81,636

Unrestricted 22,635 20,754 61,467

To al e a e 49,140 44,672 153,205 135,456

To al liabili ie a d e a e $ 119,616 $ 102,787 $ 280,013 $ 263,146

42

(dollar amounts presented in thousands)

o de ed a e e o Re e e , e e , a d ha e i Ne A e

Parking Operations Housing Operations

Fiscal Year EndedJune 30, 2011

Fiscal Year EndedJune 30, 2010

Fiscal Year EndedJune 30, 2011

Fiscal Year EndedJune 30, 2010

Operating revenues $ 22,742

Depreciation expense (3,121) (4,625)

Other operating expenses (11,285) (41,070)

Net operating income 6,475 5,321 18,034 16,255

Nonoperating revenues (expenses)

Grants, contracts, and other revenues - 1,183 -

Interest expense (1,726) (2,184)

Net nonoperating revenues (expenses) (1,534) (748) (2,184)

Other revenues (expenses)

Capital gifts - - 15 -

Net other revenues (expenses) - - 15 -

Net transfers from (to) University Funds (473) (755) 448 62I c ea e i e a e 4,468 2,580 17,749 14,133

Net assets Net assets, beginning of year 44,672 135,456 121,323

Ne a e , e d o ea $ 49,140 $ 44,672 $ 153,205 $ 135,456

(dollar amounts presented in thousands)

o de ed a e e o a h loParking Operations Housing Operations

Fiscal Year EndedJune 30, 2011

Fiscal Year EndedJune 30, 2010

Fiscal Year EndedJune 30, 2011

Fiscal Year EndedJune 30, 2010

Net cash provided (used) by:

Operating activities $ 8,770 $ 26,007

- 1,183 -

Net increase (decrease) in cash 11,336 7,474Beginning cash and cash equivalent balances 26,835 135,035

di ca h a d ca h e i ale bala ce $ 38,171 $ 26,835 $ 111,306 $ 135,035_____________________________________________________________________________________________________________________________

and housing auxiliary activities was outstanding in the

terms of 12 to 18 years. Total revenue-backed debt for capital

outstanding in the amount of $43,015,000 at June 30, 2010,

and interest requirements for the debt.

43

Note 18—Commitments and Loss Contingencies

The university had outstanding commitments for capital construction projects of $146,604,000 and $138,611,000 at June 30, 2011 and 2010, respectively.

Note 19—Subsequent Event

On July 26, 2011, the university issued Student Fee Bonds

$32,030,000 were issued for new projects and $62,430,000 for refunding prior bonds. Series U Bond proceeds provided funds for the costs of acquiring, constructing and equip-ping a neurosciences research building at the Indianapolis

campus and for acquiring land at the South Bend campus. Proceeds of the bonds were also used to refund certain outstanding Student Fee Bonds Series N, O, and P and to pay certain related costs of issuance. Certain Series N bonds were subject to a current refunding and redeemed prior to maturity on August 25, 2011. Certain Series O and Series P

dates of August 1, 2013 and August 1, 2014, respectively. The Series U bonds were issued under the authority of Indiana Code 21-34-6 (Student Fee Bonds). The true interest cost for

generated future debt service savings of $6,646,000, which equates to a net present value savings of $5,663,000.

Refer to Note 8, Bonds and Notes Payable, for more informa-tion on long-term debt.

44

____________________________________________________________________________________________________________________________

Required Supplementary Information____________________________________________________________________________________________________________________________

Schedule of Funding Progress for IU Replacement Retirement Plan:(dollar amounts presented in thousands)

Actuarial Valuation

Date

Actuarial Value of Assets

(a)

Actuarial Accrued Liability (AAL)

(b)

Unfunded AAL (UAAL) (b - a)

Funded Ratio (a/b)

Covered Payroll

(c)

UAAL as Percentage of Covered Payroll ((b-a) / c)

7/1/2010 $ 11,541 53.7% $ 8,643 115.2%

17,713 53.2% 8,446

7/1/2008 16,750 66.6% 8,612

(dollar amounts presented in thousands)Actuarial Valuation

Date

Actuarial Value of Assets

(a)

Actuarial Accrued Liability (AAL)

(b)

Unfunded AAL (UAAL) (b - a)

Funded Ratio (a/b)

Covered Payroll

(c)

UAAL as Percentage of Covered Payroll

((b-a) / c)7/1/2010 $ – 0.0% 46.1%

– 443,276 443,276 0.0% 45.8%

7/1/2008 – 488,523 488,523 0.0% 56.2%

____________________________________________________________________________________________________________________________

45

Excerpts from Indiana University Foundation Notes to the Financial Statements:

46

Excerpts from Indiana University Foundation Notes to the Financial Statements:

47

Excerpts from Indiana University Foundation Notes to the Financial Statements:

48

Excerpts from Indiana University Foundation Notes to the Financial Statements:

49

Excerpts from Indiana University Foundation Notes to the Financial Statements:

50

Excerpts from Indiana University Foundation Notes to the Financial Statements:

51

Excerpts from Indiana University Foundation Notes to the Financial Statements:

52

Excerpts from Indiana University Foundation Notes to the Financial Statements:

53

Excerpts from Indiana University Foundation Notes to the Financial Statements:

54

Excerpts from Indiana University Foundation Notes to the Financial Statements:

55

THE TRUSTEES OF INDIANA UNIVERSITY

illia R. a , Allen County, Chair, Board of Trustees

a ic A. ho lde , Vanderburgh County, Vice ChairMa lle ile i ho , Member, Hamilton County

ce ole, Member, District of Columbia hili N. e , ., Member, Kosciusko County

Tho a . Reill , ., Member, Marion Countye ica . Rice, Member, Hamilton County illia ill o , Member, Hong Kong

Abbe e le , Member, Clark County

Robi Ro G e , Secretary o o h . a ell, Assistant Secretary

Ma a ce Mc o , Treasurere a T. obi e, Assistant Treasurer

ADMINISTRATIVE OFFICERS

T Michael A. McRobbie, President of the UniversityAda . e be , President Emeritus of the UniversityTho a h lich, President Emeritus of the Universityoh . R a , President Emeritus of the University

oh A le a e, Executive Vice President for University

ha le R. a , Executive Vice President and Chancellor, Indiana University-Purdue University Indianapolis

a e a o , Executive Vice President, and Provost, IU BloomingtonNeil D. Theobald, Senior Vice President and Chief

D. ai a e , Vice President for University Clinical

IU School of Medicine

Do o h . a ell, Vice President and General CounselG. ede ic Gla , Vice President and Director of Intercollegiate Athleticso e o , Vice President for Research

Administration (since August 1, 2010) d i . Ma hall, Vice President for Diversity,

Tho a A. Mo i o , Vice President for Capital Projects and Facilities

a ic O Mea a, Vice President for International

Michael M. a le, and Government RelationsRobe . ch abel, Interim Vice President for Research Administration (until July 31, 2010)

illia . e ha , Vice President for Engagement ad heele , Vice President for Information

T Michael a i , Indiana University Kokomo

illia . o e, Indiana University Northwest (Gary)

a d a R. a e o Ra dle , Indiana University Southeast (New Albany)Na e a da , Indiana University East (Richmond)

a Mae Rec , Indiana University South Bend Michael A. a ell, Indiana University- Purdue University Fort Wayne

O O Tho a o be , Executive Director, IU Alumni

Association e e h R.R. G o o i , University Chancellor

e e R. Te el, President, IU Foundation

56

Additional copies of this report may be obtained from:

Bryan Hall 212Indiana UniversityBloomington, IN 47405-7000

Additional Information

A

Assembly Hall 1001 East 17th StreetIndiana UniversityBloomington, IN 47408

AAlumni Association1000 East 17th StreetIndiana UniversityBloomington, IN 47408

For additional information:

G I

RelationsBryan Hall 300107 S. Indiana Avenue Bloomington, IN 47405-7000

R Associate Vice President and University ControllerFinancial Management Services

Indiana UniversityBloomington, IN 47405-3085

AVice Provost for Enrollment Management

300 N. Jordan Ave.Indiana UniversityBloomington, IN 47405-1106

GIndiana University FoundationShowalter HouseP.O. Box 500Bloomington, IN 47402-0500

G

601 E. Kirkwood Avenue, Franklin Hall 116Bloomington, IN 47405

57

The following members of Financial Management Services prepared the 2010-2011 Financial Report

Joan Hagen, Associate Vice President and University Controller Dave Gooptu, Chief Accountant and Managing Director, Financial Management Services William Overman, Manager of External Financial Reporting and University Chart Melody Amato, External Reporting and Compliance

Phyllis Taylor, Senior Communications Specialist

The following entities provided data essential in the

Construction Management Indiana University Foundation

Real Estate Risk Management Student Information and Fiscal Services

University Human Resource Services

and Financial Management Services.

ACKNOWLEDGEMENTS

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APPENDIX C

DEFINITIONS

For purposes of this Official Statement, the following terms will have the meaning specified below unless the context clearly indicates otherwise.

“Account” means any of the accounts established pursuant to the Amended Indenture or the Twenty-First Supplemental Indenture.

“ACH” means the Automated Clearing House Network.

“Act” means Indiana Code 21-34-6 through 21-34-10 and Indiana Code 5-1-5, as amended.

“Additional Bonds” means the additional Parity Bonds or Subordinated Bonds authorized to be issued under the Indenture and any Bonds issued in substitution or replacement therefor and excludes junior lien obligations as described in the Indenture.

“Amended Indenture” means the Original Indenture as previously supplemented and as amended by a First Supplemental and Amendatory Indenture dated as of May 1, 1986; a Second Supplemental and Amendatory Indenture dated as of June 1, 1986; a Third Supplemental and Amendatory Indenture dated as of July 1, 1987; a Fifth Supplemental and Amendatory Indenture dated as of April 1, 1989; a Seventh Supplemental and Amendatory Indenture dated as of June 1, 1991; an Eleventh Supplemental and Amendatory Indenture dated as of April 1, 1998; and a Fourteenth Supplemental Indenture dated as of February 1, 2003.

“Annual Debt Service Requirement” for any Fiscal Year means, in connection with all Parity Bonds, the sum of (i) an amount equal to the amount of scheduled principal or mandatory sinking fund payments and interest due in such Fiscal Year on Fixed Rate Bonds (excluding principal of any balloon maturity and also excluding principal of any Optional Maturity for which a Credit Support Instrument has been provided), (ii) the amount of principal and interest projected to become due in such Fiscal Year on Variable Rate Bonds (excluding principal of any balloon maturity and also excluding principal of any Optional Maturity for which a Credit Support Instrument has been provided) and (iii) an amount equal to the principal amount of a balloon maturity occurring after the Fiscal Year in question divided by the number of years to maturity from its date of original issuance or from such later date in or prior to the Fiscal Year in question as specified in the Supplemental Indenture authorizing the issuance of such balloon maturity. Such projection of interest on Variable Rate Bonds will be calculated at any date of calculation as an amount equal to 110% of the greater of (a) the average daily interest rate during the then preceding 12-month period or (b) the rate in effect on the date of calculation, but in either event not to exceed any maximum interest rate which may be set for such Variable Rate Bonds. Interest which is payable from the proceeds of Bonds set aside for such purpose in the Sinking Fund (i.e., accrued or capitalized interest) will be excluded in determining the Annual Debt Service Requirement. For purposes of this definition, “balloon maturity” means Bonds of any series or multiple series of Bonds issued at substantially the same time with principal amounts maturing or otherwise due and payable within any 12-month period equal to or greater than 15% of the original principal amount of such Bonds; provided that, in calculating the amount due and payable in any 12-month period, such principal amount will be reduced to the extent that all or any portion of such amount is required to be amortized prior to such 12-month period; and provided further that for any balloon maturity the University may elect to waive the provisions of clause (iii) above for any one or more series of Bonds at the time of delivery thereof and treat such one or more series of Bonds as if such balloon maturity was not a balloon maturity for purposes of the application of this definition. The maturing amount of any Bonds issued at a discount will not be considered a balloon maturity unless the principal amount of such Bonds would be considered as a balloon maturity. See “SECURITY FOR SERIES V BONDS—Issuance of Additional Bonds.”

“Authenticating Agent” means each and every agent appointed by the Trustee from time to time as agent of the Trustee for the authentication of Series V Bonds for so long as such appointment continues in effect.

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“Authorized Denominations” for Series V Bonds means $5,000 and any integral multiple thereof.

“Authorized Officer” means: (i) in the case of the University, the Chair, any Vice Chair, the Secretary or any Assistant Secretary of the Board of Trustees of the University or the Treasurer or any Assistant Treasurer of the Board of Trustees of the University, and any other officer or other employee duly authorized by the University or any of the above officers and (ii) in the case of the Trustee, any Vice President, any Assistant Vice President and any Trust Officer, and any other person authorized by or pursuant to the by-laws of the Trustee or a resolution of the Board of Directors of the Trustee.

“Bond” or “Bonds” means any obligation or obligations, including bonds, notes, temporary, interim or permanent certificates of indebtedness, debentures, capital leases, or any and all other obligations consistent with the Indenture and allowable under State law, which are payable out of Student Fees and other Pledged Funds and which obligation or obligations are authenticated and delivered under and pursuant to the Indenture.

“Bond Counsel” means any law firm having a national reputation in the field of municipal law whose opinions are generally acceptable by purchasers of municipal bonds, appointed by resolution of the University with the approval of the Trustee.

“Bondholder” or “holder of a Bond” or any similar term means a registered owner of any Bond.

“Business Day” means any day other than a Saturday, Sunday or other day on which banks located in the State of Indiana are required or authorized to remain closed.

“Code” means the Internal Revenue Code of 1986, as amended or any successor or successors thereto.

“Credit Support Instrument” means an irrevocable letter of credit, line of credit, insurance policy, guaranty or surety bond or similar instrument providing for the payment of or guaranteeing the payment of principal or purchase price of and interest on Bonds when due. Any such insurance policy, guaranty or surety bond or similar instrument must be noncancellable during the term of the Bonds for which it is provided and must be issued by an insurer with a credit rating within the two highest full rating categories available generally to issuers of such insurance, guaranties or surety bonds from a nationally recognized rating service. Any obligation on the part of the University to purchase Bonds from their holders upon the completion of the term of such Credit Support Instrument will be treated for these purposes as the conclusion of the term of such Bonds. Any such letter of credit or line of credit must be issued by a banking institution which has, or the parent of which has, or the holding corporation of which it is the principal bank has, at the times of issuance, a credit rating on its long-term unsecured debt within the two highest full rating categories generally available to banking institutions from a nationally recognized rating service.

“Escrow Agreement” means the Escrow Deposit Agreement, dated as of October 15, 2012, between the University and the Escrow Trustee and Trustee.

“Escrow Trustee” means The Bank of New York Mellon Trust Company, N.A., and any permitted successor as escrow trustee under the Indenture, serving in such capacity under the Escrow Agreement.

“Escrowed Municipals” means obligations of state or local governments secured by an irrevocable escrow of Federal Securities; provided that such obligations are rated in the highest long term rating category by a nationally recognized rating service.

“Federal Securities” means securities of the type described in subparagraph (1) of the definition of “Permitted Investments.”

“Fiscal Year” means the period commencing on the first day of July of any year and ending on the last day of June on the next succeeding year or such other period as established by the University from time to time.

“Fixed Rate Bond” means a Bond issued at or bearing a fixed rate or rates of interest.

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“Fund” means any of the funds established pursuant to the Amended Indenture or the Twenty-First Supplemental Indenture.

“Indenture” means the Amended Indenture as supplemented by the Twenty-First Supplemental Indenture and as otherwise supplemented and amended from time to time.

“Interest Payment Date” means February 1, 2013, and each February 1 and August 1 thereafter.

“Maximum Annual Debt Service” means the highest Annual Debt Service Requirement for the current or any succeeding Fiscal Year.

“New Projects” means all or any portion of the following qualified energy savings projects:

(a) Qualified Energy Savings Project – Indianapolis; and

(b) Qualified Energy Savings Project – South Bend.

“Optional Maturity” or “Optional Maturities” means Parity Bonds which may, at the option of the owners thereof, be subject to payment, redemption or purchase by or on behalf of the University.

“Original Indenture” means the Trust Indenture by and between the University and the Trustee, dated as of October 1, 1985.

“Outstanding” or “Bonds Outstanding” means all Bonds which have been duly authenticated and delivered by the Trustee under the Indenture, except:

(a) Bonds cancelled after purchase in the open market or because of payment at or redemption prior to maturity;

(b) Bonds for the payment or redemption of which cash or investments (but only to the extent that the full faith and credit of the United States of America are pledged to or secure the timely payment thereof) have been theretofore deposited with the Trustee (whether upon or prior to the maturity or redemption date of any such Bonds) in the manner and with the type of investments provided in the Indenture; provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption must have been given or arrangements satisfactory to the Trustee must have been made therefor, or waiver of such notice satisfactory in form to the Trustee, must have been filed with the Trustee; and

(c) Bonds in lieu of which others have been authenticated under the Indenture.

“Parity Bonds” means the Series I Bonds, Series J Bonds, Series O Bonds, Series P Bonds, Series Q Bonds, Series R Bonds, Series S Bonds, Series T Bonds, Series U Bonds and Series V Bonds, and all additional Bonds which are secured by a pledge, assignment and grant of and first lien and security interest against the Pledged Funds (except as otherwise provided in regard to the Reserve Fund).

“Paying Agent” means the Trustee, acting as such, and any additional paying agent for the Series V Bonds appointed pursuant to the Twenty-First Supplemental Indenture, their respective successors, and any other entity which may at any time be substituted in their respective places pursuant to the Twenty-First Supplemental Indenture.

“Permitted Investments” means, with respect to moneys held by the Trustee, any of the following which at the time are legal investments under the laws of Indiana for the moneys proposed to be invested therein:

(1) Direct obligations of the United States of America or obligations the timely payment of principal of and interest on which is unconditionally guaranteed by the United States of America;

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(2) Escrowed Municipals;

(3) Bonds, debentures or notes or other evidences of indebtedness issued or guaranteed by any of the following agencies: Export-Import Bank of the United States; Federal National Mortgage Association; Government National Mortgage Association; Federal Financing Bank; Federal Intermediate Credit Bank; Bank for Cooperatives; Federal Land Bank; Federal Home Loan Bank; Farmers Home Administration; Federal Farm Credit Banks; and The Federal Home Loan Mortgage Association;

(4) Certificates of deposit issued by or interest-bearing time deposit accounts with banks or savings banks organized under the laws of the State of Indiana or the United States of America, including the Trustee, which deposits or certificates are fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or, to the extent not so insured, are fully collateralized by obligations described in clauses (1) or (3) based upon market value, which obligations are in the possession of the Trustee or its agent and are free and clear of all security interests, liens or other rights of any third party, and in which obligations the Trustee has a first perfected security interest; provided such banks or savings banks, including the Trustee, have capital, surplus and undivided profits in excess of $50 million; provided, further, that no such deposit or certificate is in excess of 10% of such capital, surplus and undivided profits, in either case;

(5) Repurchase agreements with banks or other financial institutions, including the Trustee, which are fully collateralized by obligations described in clauses (1) or (3) based upon market value, which obligations are in the possession of the Trustee or its agent and are free and clear of all security interests, liens or other rights of any third party, and in which obligations the Trustee has a first, perfected security interest; provided, that any financial institution which is a broker-dealer must be a member of the Securities Investor Protection Corporation; and

(6) Investment agreements which are issued by banks or insurance companies who are, or which agreements are, at the time of issuance, execution and delivery of such agreements, rated in the two highest full rating categories by Moody’s Investors Service and Standard & Poor’s Ratings Group, or investment agreements in form acceptable to MBIA by financial institutions acceptable to MBIA.

“Pledged Funds” means Student Fees and the University’s right to receive the same, the proceeds thereof, and all Funds created under the Indenture which are held by the Trustee (except that neither the Series V Bonds nor any currently Outstanding Bonds, except the Series I Bonds and Series J Bonds, have any claim on the Reserve Fund or any other reserve fund).

“Principal Operations Office” when used with respect to the Trustee’s performance of its Paying Agent and Registrar functions means its operations office located in East Syracuse, New York.

“Prior Projects” means the facilities financed or refinanced by the Refunded Bonds and the QES Notes.

“Projects” means the Prior Projects and the New Projects.

“QES Notes” means (i) the Fully Registered Promissory Note dated February 28, 2005, (ii) the 2007 Indiana University Kokomo Qualified Energy Savings Project Note dated August 17, 2007, and (iii) the 2008 Indiana University Southeast Qualified Energy Savings Project Note dated June 26, 2008.

“Rebate Agreement” means, the Construction and Rebate Agreement between the University and the Trustee dated as of October 15, 2012.

“Record Date” means, with respect to any Interest Payment Date, the fifteenth day of the month immediately preceding such Interest Payment Date.

“Refunded Bonds” means the Bonds described in Appendix F to this Official Statement.

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“Registrar” means the Trustee when acting as such in accordance with the Twenty-First Supplemental Indenture.

“Reserve Fund” means the reserve fund established by the Indenture. The Series V Bonds (and the Series O Bonds, Series P Bonds, Series Q Bonds, Series R Bonds, Series S Bonds, Series T Bonds and Series U Bonds) are not secured by the Reserve Fund.

“Reserve Fund Credit Instrument” means an insurance policy, guaranty or surety bond or an irrevocable letter of credit which may be deposited in the Reserve Fund in lieu of or in partial substitution for cash or Permitted Investments to be on deposit therein. The company providing such insurance policy, guaranty or surety bond must be an insurer which, at the time of issuance of the policy, guaranty or surety bond, has been assigned the highest rating accorded insurers by Moody’s Investors Service or Standard & Poor’s Ratings Group or any successor rating service, and the policy must be subject to the irrevocable right of the Trustee to draw thereon in a timely fashion as needed and provided in the Indenture upon satisfaction of any conditions set forth in the Indenture. Any irrevocable letter of credit must be payable to and deposited with the Trustee and must be issued by a banking institution which has, or the parent of which has, or the holding corporation of which it is the principal bank has, at the time of issuance, a credit rating on its long term unsecured debt within the two highest full rating categories from a nationally recognized rating service. If the rating of any such banking institution, parent or holding corporation is downgraded below the two highest full rating categories or the letter of credit is otherwise terminated or not renewed by the University, then the University must promptly either (i) direct the Trustee to draw on such letter of credit and deposit the proceeds of said drawing in the Reserve Fund in satisfaction of the Reserve Fund Requirement or (ii) otherwise provide funds for deposit into the Reserve Fund in satisfaction of the Reserve Fund Requirement.

“Reserve Fund Requirement” means Maximum Annual Debt Service. However, for purposes of Maximum Annual Debt Service on any Variable Rate Bonds, notwithstanding the formula for calculation of interest on Variable Rate Bonds found in the definition of Annual Debt Service Requirement, interest on such Variable Rate Bonds will be calculated at a rate equal to the rate quoted in the most recent issue of The Bond Buyer (or any successor publication thereto) on the sale date of any such Additional Bonds as the 25 Revenue Bond Index (or any successor index). Notwithstanding the foregoing, there is no Reserve Fund Requirement with respect to the Series V Bonds (or the Series O Bonds, Series P Bonds, Series Q Bonds, Series R Bonds, Series S Bonds, Series T Bonds or Series U Bonds), and the principal of and interest on the Series V Bonds (and the principal of and interest on the Series O Bonds, Series P Bonds, Series Q Bonds, Series R Bonds, Series S Bonds, Series T Bonds and Series U Bonds) will not be taken into consideration in determining the Reserve Fund Requirement with respect to those Outstanding Bonds subject to the Reserve Fund Requirement. See Appendix D, “SUMMARY OF CERTAIN PROVISIONS OF INDENTURE—Flow of Funds–Reserve Fund.”

“Resolutions” means the resolutions adopted and approved by the Board of Trustees of the University on August 17, 2012, and the Finance and Audit Committee thereof on October 11, 2012, authorizing, among other things, the issuance of the Series V Bonds.

“Series I Bonds” means the University’s Outstanding Indiana University Student Fee Bonds, Series I, dated July 15, 1992, and issued in the original principal amount of $45,214,686.

“Series J Bonds” means the University’s Outstanding Indiana University Student Fee Bonds, Series J, dated March 1, 1993, and issued in the original principal amount of $113,057,592.

“Series O Bonds” means the University’s Outstanding Indiana University Student Fee Bonds, Series O, dated March 6, 2003, and issued in the original principal amount of $111,490,000.

“Series P Bonds” means the University’s Outstanding Indiana University Student Fee Bonds, Series P, dated December 14, 2004, and issued in the original principal amount of $93,920,000.

“Series Q Bonds” means the University’s Indiana University Student Fee Bonds, Series Q, dated June 20, 2006, and issued in the original principal amount of $32,895,000.

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“Series R Bonds” means the University’s Indiana University Student Fee Bonds, Series R, dated June 20, 2006, and issued in the original principal amount of $129,150,000.

“Series S Bonds” means the University’s Indiana University Student Fee Bonds, Series S, dated February 21, 2008, and issued in the original principal amount of $88,345,000.

“Series T Bonds” means (i) the University’s Indiana University Tax-Exempt Student Fee Bonds, Series T-1, dated April 20, 2010, and issued in the aggregate principal amount of $16,010,000, and (ii) the University’s Indiana University Taxable Student Fee Bonds, Series T-2 (Build America Bonds - Direct Pay Option), dated April 20, 2010, and issued in the aggregate principal amount of $51,390,000.

“Series U Bonds” means the University’s Indiana University Student Fee Bonds, Series U, dated July 26, 2011, and issued in the original principal amount of $94,460,000.

“Series V Bond” or “Series V Bonds” means one or more of the Series V-1 Bonds and the Series V-2 Bonds.

“Series V Project Fund” means the Fund so designated which is created pursuant to the Twenty-First Supplemental Indenture.

“Series V-1 Bond” or “Series V-1 Bonds” means the University’s Indiana University Tax-Exempt Student Fee Bonds, Series V-1, authorized pursuant to the terms and conditions of the Twenty-First Supplemental Indenture.

“Series V-1 Interest Account” means the Account so designated which is created in the Sinking Fund pursuant to the Twenty-First Supplemental Indenture.

“Series V-1 Principal Account” means the Account so designated which is created in the Sinking Fund pursuant to the Twenty-First Supplemental Indenture.

“Series V-2 Bond” or “Series V-2 Bonds” means the University’s Indiana University Taxable Student Fee Bonds, Series V-2, authorized pursuant to the terms and conditions of the Twenty-First Supplemental Indenture.

“Series V-2 Interest Account” means the Account so designated which is created in the Sinking Fund pursuant to the Twenty-First Supplemental Indenture.

“Series V-2 Principal Account” means the Account so designated which is created in the Sinking Fund pursuant to the Twenty-First Supplemental Indenture.

“Sinking Fund” means the Fund so designated which is created by the Original Indenture.

“Student Fees” means all academic fees (including tuition) however denominated, assessed by the University against students attending Indiana University, except certain dedicated fees and other fees released from the lien of the Indenture.

“Subordinated Bonds” means Additional Bonds issued pursuant to the Indenture which are issued for the specific purpose of evidencing a liability of the University in favor of any entity providing a Credit Support Instrument and which are subordinated to other Bonds as to principal and interest repayment.

“Supplemental Indenture” means any supplemental indenture between the University and the Trustee entered into pursuant to and in compliance with the provisions of the Indenture.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association with a corporate trust office located in Indianapolis, Indiana, and its successors and any corporation resulting from or surviving any consolidation or merger to which it or its successor may be a party and any successor trustee serving under the Indenture.

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“Twenty-First Supplemental Indenture” means the Twenty-First Supplemental Indenture between the University and the Trustee, dated as of October 15, 2012.

“Undelivered Bonds” means, at any time, Series V Bonds which are not presented to the Trustee for payment when the principal thereof and premium, if any, and interest thereon has become due, either at maturity or on the date fixed for redemption or otherwise, and for which sufficient moneys are on deposit with the Trustee or the Paying Agent to pay such principal thereof and premium, if any, and interest thereon in accordance with the Twenty-First Supplemental Indenture.

“Undertaking” means the Continuing Disclosure Supplement, dated as of October 15, 2012, to the Amended and Restated Continuing Disclosure Undertaking Agreement of the University, dated as of March 1, 2011, as previously supplemented.

“University” means The Trustees of Indiana University, a statutory body politic of the State of Indiana, or any successor entity.

“Variable Rate Bond” means any Bond the interest rate on which, at the time of issuance, is not established at a fixed numerical rate or rates to stated maturity.

“Written Request” means a request in writing signed by the University’s authorized representative.

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D-1

APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF INDENTURE

Flow of Funds

Sinking Fund. At least five days prior to each interest or principal payment on the Series V Bonds and any Parity Bonds (except Optional Maturities provided for by virtue of a Credit Support Instrument), the University will transfer and remit Student Fees or other available funds to the Trustee in immediately available funds for deposit in a separate fund known as the “Sinking Fund,” in an amount which, when added to any amount then in the Sinking Fund, equals the sum of the principal of and interest on all Parity Bonds becoming due on the following interest or principal payment date (other than Optional Maturities for which a Credit Support Instrument is provided) and any deficiencies then in existence in regard to said fund. On or before any interest or principal payment date on Subordinated Bonds or any time for paying Optional Maturities for which a Credit Support Instrument has been provided but which have not been paid through a Credit Support Instrument, after making the transfers required above and described in the paragraph below concerning the Reserve Fund (but not with respect to the Series V Bonds or the Series O Bonds, Series P Bonds, Series Q Bonds, Series R Bonds, Series S Bonds, Series T or Series U Bonds), the University will transfer and remit Student Fees or other available funds to the Trustee in immediately available funds for deposit in the Sinking Fund in an amount which, when added to the excess amount in the Sinking Fund and other funds legally available for that purpose, equals the principal amount of Subordinated Bonds or Optional Maturities not paid through a Credit Support Instrument due on that payment date and interest accrued to that date in the order of priority established by the applicable Supplemental Indenture. Payments of such Optional Maturities from the Sinking Fund will be subordinate to the payment of the principal of and interest on Parity Bonds.

The moneys in the Sinking Fund will be used by the Trustee for the payment of the interest on and principal of the Parity Bonds as the same become due.

The Trustee will establish and maintain, so long as any of the Series V Bonds are Outstanding, separate accounts within the Sinking Fund to be known as the “Series V-1 Interest Account” and “Series V-2 Interest Account.” Moneys on deposit in the Series V-1 Interest Account and the Series V-2 Interest Account will be used by the Trustee to pay interest on the applicable Series V Bonds whenever such interest is due and payable. So long as any Series V Bonds are Outstanding, the Trustee will, on the first day of each February and August (or if such first day is not a Business Day, then on the first Business Day preceding such day), beginning February 1, 2013, deposit in the applicable Interest Account from moneys received from the University for such purpose an amount equal to the difference, if any, between (a) the interest due on the applicable Series V Bonds on said date and (b) the amount of moneys then on deposit in the applicable Interest Account available to pay such interest.

The Trustee will establish and maintain, so long as any of the Series V Bonds are Outstanding, separate accounts within the Sinking Fund to be known as the “Series V-1 Principal Account” and the “Series V-2 Principal Account.” All payments by the University on the Series V Bonds in respect to principal will be deposited by the Trustee in the Series V-1 Principal Account and the Series V-2 Principal Account. So long as any Series V Bonds are Outstanding, the Trustee will, on August 1, 2013, and on the first day of each August thereafter (or, if such first day is not a Business Day, then on the first Business Day preceding such day), deposit in the applicable Principal Account from any moneys received by the Trustee from the University an amount equal to the difference, if any, between (a) the principal amount of applicable Series V Bonds maturing on said date and (b) the amount of moneys then on deposit in the applicable Principal Account available to pay principal of the applicable Series V Bonds so maturing. Moneys deposited in the applicable Principal Account will be used by the Trustee to pay the applicable Series V Bonds at maturity or upon mandatory sinking fund redemption.

Reserve Fund. The Reserve Fund will not be available to pay the principal of or the interest on the Series V Bonds (or the Series O Bonds, Series P Bonds, Series Q Bonds, Series R Bonds, Series S Bonds, Series T or Series U Bonds). With respect to other Bonds Outstanding, the University will maintain with the Trustee a separate fund known as the “Reserve Fund” pursuant to the Indenture. On the date of issuance of the Series V Bonds and subject to certain permitted withdrawals described below, the Trustee will hold Reserve Fund

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Credit Instruments, cash and investments in the Reserve Fund in satisfaction on an aggregate basis of the Reserve Fund Requirement for the Outstanding Bonds which are secured by the Reserve Fund. In connection with the issuance of Additional Bonds, the University may deposit in the Reserve Fund an amount sufficient to maintain the fund equal to the Reserve Fund Requirement. However, the University may issue Additional Bonds that are not subject to the Reserve Fund Requirement (including the Series V Bonds), and for which the Reserve Fund will be unavailable with respect to the payment of the principal of and the interest on such Additional Bonds. Such deposit requirement, if any, in connection with the issuance of Additional Bonds may also be satisfied by providing in a Supplemental Indenture that 50% of the increase in the Reserve Fund Requirement is deposited upon delivery of the Additional Bonds and that the remainder may be provided for by annual deposits commencing on the October 1 following the date on which said Additional Bonds are issued and continuing on or before each October 1 thereafter for three succeeding years or such lesser number of years specified in the Supplemental Indenture. Said deposits, if any, must be in the amounts provided for in the Supplemental Indenture.

For Bonds Outstanding subject to the Reserve Fund Requirement, the University may elect to provide a Reserve Fund Credit Instrument for purposes of maintaining the Reserve Fund Requirement. In those circumstances, the Trustee will include in the total amount held in the Reserve Fund an amount equal to the maximum principal amount which could be drawn by the Trustee under any Reserve Fund Credit Instrument. Under certain circumstances involving the downgrading of ratings of banks related to letters of credit comprising Reserve Fund Credit Instruments, the Trustee is required to draw on the letter of credit or the University is required to otherwise provide funds to deposit in the Reserve Fund in lieu of the letter of credit.

Solely with respect to Bonds Outstanding subject to the Reserve Fund Requirement, the Reserve Fund will be used and applied to make up deficiencies in the Sinking Fund with respect to any Parity Bonds (other than Optional Maturities for which a Credit Support Instrument has been provided) and the Trustee will draw first on any cash or Permitted Investments on deposit in the Reserve Fund and then, pro rata or as otherwise provided in the applicable Supplemental Indenture, on the Reserve Fund Credit Instrument or Instruments as needed for the purpose of paying the principal of, redemption premium, if any, and interest on Parity Bonds when due, when there are insufficient moneys in the Sinking Fund for such purposes.

Any withdrawal from the Reserve Fund, if the amount thereafter in the Reserve Fund is less than the Reserve Fund Requirement, must be subsequently replaced and restored from the first available Pledged Funds after all required transfers to the Sinking Fund for Parity Bonds have been made in full. Such replacement and restoration will first be provided in regard to all Reserve Fund Credit Instrument or Instruments on a pro rata basis or as otherwise provided from time to time in Supplemental Indentures and thereafter in favor of any portion of the Reserve Fund to be maintained in cash or Permitted Investments.

If a drawing is made from any Reserve Fund Credit Instrument, the University will reinstate the maximum limits of such instrument within 12 months following such drawing solely from Pledged Funds available after all required payments have been made into the Sinking Fund for Parity Bonds, so that, together with moneys on deposit therein, if any, there will be on deposit in the Reserve Fund an amount (including the maximum amount then payable under the terms of the Reserve Fund Credit Instrument) equal to the Reserve Fund Requirement.

Series V Project Fund. The Trustee will transfer and deposit (or cause to be transferred and deposited) the proceeds from the sale of the Series V Bonds to the “Series V Project Fund” established and maintained by the University pursuant to the Rebate Agreement. The Series V Project Fund is not included in the Pledged Funds under the Indenture.

Moneys deposited to the credit of the Series V Project Fund will be deposited in the following Accounts of the Series V Project Fund:

Refunding Account. A portion of the proceeds of the Series V Bonds will be deposited into the “Refunding Account.” The University will establish and maintain separate accounts with the Escrow Trustee pursuant to the Escrow Agreement to be known as the “2012 Escrow Accounts” (the “Escrow Accounts”). The University will immediately transfer (or cause to be transferred) all moneys deposited in the Refunding Account to the Escrow Trustee for deposit in the Escrow Accounts. Such moneys will be held in the Escrow Accounts, and will be invested

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and disbursed to pay the principal of and premium, if any, and interest on the Refunded Bonds as provided in the Escrow Agreement.

QES Note Refunding Account. A portion of the proceeds of the Series V Bonds will be deposited into the “QES Note Refunding Account.” The University will immediately apply (or cause to be applied) all moneys deposited in the QES Note Refunding Account to pay the principal of and premium, if any, and interest on the Series 2005 QES Note and the Series 2007 QES Note on or about the date of issuance of the Series V Bonds (the date on or about which the Series 2005 QES Note and the Series 2007 QES Note will be called for redemption), and to pay the principal of and premium, if any, and interest on the Series 2008 QES Note on or about December 31, 2012 (the date on or about which the Series 2008 QES Note will be called for redemption).

QES Accounts. A portion of the proceeds of the Series V Bonds, will be deposited into (i) the “Indianapolis Campus -- QES Account” and (ii) the “South Bend Campus -- QES Account.” Amounts in each such Account will be applied only toward the cost of (or to reimburse the University for payment theretofore made by it on account of) any portion of the New Projects for which such Account is created. Upon the completion of any portion of the New Projects for which any such Account is created, any balance of moneys in such Account will, at the option of the University, be (i) applied to pay other costs associated with such portion of the New Projects, (ii) transferred to the Series V-1 Interest Account or the Series V-2 Interest Account of the Sinking Fund to pay interest on the applicable Series V Bonds, (iii) transferred to an additional project account to be created pursuant to the provisions of the Rebate Agreement, if it becomes impossible or impractical otherwise to spend such proceeds for the designated projects in a timely fashion, subject to the limitations and conditions of the Rebate Agreement, or (iv) deposited in the Rebate Fund.

Expense Account. A portion of the proceeds of the Series V Bonds will be deposited into the “Expense Account”. Moneys on deposit in the Expense Account will be applied to pay the costs of issuing the Series V Bonds and refunding the Refunding Bonds and the QES Notes. Any moneys remaining in the Expense Account on April 15, 2013, will be transferred, at the option of the University, to either the Earnings Account, the Series V-1 Interest Account or the Series V-2 Interest Account of the Sinking Fund or The Trustees of Indiana University Series V-1 Rebate Fund (the “Rebate Fund”) created under the Rebate Agreement.

Earnings Account. Moneys on deposit in the Series V Project Fund and all the accounts thereof (except the Refunding Account will be invested in accordance with the provisions of the Rebate Agreement, and income or losses resulting from such investments will be credited or debited to the “Earnings Account”. Moneys on deposit in the Earnings Account will, at the option of the University, be (i) applied to the payment of the costs of (or to reimburse the University for payment previously made by it on account of) any of the New Projects or the costs of issuing the Series V Bonds (including any investment management fees), (ii) transferred to the Series V-1 Interest Account or the Series V-2 Interest Account of the Sinking Fund to pay interest on the applicable Series V Bonds or (iii) deposited into the Rebate Fund.

Additional Security

At any time by a Supplemental Indenture, the University may pledge, assign or grant a security interest in or lien on any additional funds or source of regular income of the University to the Trustee for the security of the Bonds, free and clear of any equal or prior security interest or lien. Any such Supplemental Indenture must be accompanied by an opinion of nationally recognized bond counsel that the pledge of additional security is valid, binding and effective. Upon such a Supplemental Indenture being delivered, the amount of the additional income pledged thereby as to which the Supplemental Indenture applies will be added to the amount of Student Fees for purposes of computing the amount of Additional Bonds which may be issued.

Partial Release of Lien on Student Fees

The University, from time to time, has the right to incur other indebtedness pursuant to provisions of Indiana law other than the Act, which indebtedness may be payable from a particular fee or fees or other charges made to students attending Indiana University, which fees or charges may be Student Fees. The University and the Trustee may, from time to time, enter into a Supplemental Indenture for the purpose of releasing said fees or charges from the lien of the Indenture and excluding said fees or charges constituting Student Fees from the definition of

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Student Fees in the Indenture, if actual Student Fees received by the University during the preceding Fiscal Year, less those fees and charges to be removed from the definition of Student Fees and from the lien of the Indenture, are equal to or greater than five times Maximum Annual Debt Service to become due in the succeeding Fiscal Years for the payment of principal and interest charges on Parity Bonds Outstanding.

Covenants of University

In the Indenture, the University covenants, among other things:

(a) to pay the interest on and principal of the Bonds, including the Series V Bonds, according to the terms thereof and of the Indenture;

(b) to pay all the costs, charges and expenses, including reasonable attorney fees, reasonably incurred or paid by the Trustee or any Bondholder, because of the failure on the part of the University to perform, comply with and abide with each and every of the stipulations, agreements, conditions and covenants of the Bonds, including the Series V Bonds, and the Indenture, or either of them;

(c) to operate Indiana University and its instructional program to the extent that it will continue to be able to assess, charge and collect Student Fees adequate to meet its obligations and covenants under the Indenture;

(d) to establish and collect Student Fees so as to generate in each Fiscal Year amounts equal to no less than the sum of: (i) an amount equal to 2.00 times the Annual Debt Service Requirement for such Fiscal Year, provided that if the rate of interest borne by any Variable Rate Bond is fixed for such Fiscal Year at a single rate of interest, such Variable Rate Bonds will be treated as Fixed Rate Bonds for the purposes of the Annual Debt Service Requirement calculation; (ii) the amount, if any, to be paid into the Reserve Fund or to be paid to any provider of a Reserve Fund Credit Instrument with respect to such Fiscal Year; and (iii) any other amounts to be paid from Student Fees with respect to such Fiscal Year in accordance with the Indenture; and to adopt an annual budget for each Fiscal Year setting forth the above items;

(e) to keep and maintain accurate books and records relating to the collection of Student Fees and the allocation thereof, the enrollment of students at Indiana University and the payments into the Sinking Fund and Reserve Fund, which said books and records will be opened for inspection by any holder of the Bonds at any reasonable time;

(f) to furnish to the Trustee and any owner of at least $5,000,000 in aggregate principal amount of Bonds requesting the same in writing, not later than 150 days after the close of each Fiscal Year, copies of reports, certified by the Treasurer of the University, reflecting in reasonable detail the status of the books and records described in clause (e) above;

(g) that it will not permit the Projects to be used in any manner that would result in the loss of the exclusion of interest on the Series V-1 Bonds or the Refunded Bonds from gross income for federal income tax purposes under Section 103 of the Code as currently in effect, nor will it act in any other manner which would adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series V-1 Bonds, based on current law in effect on the date of delivery of the Series V-1 Bonds or the Refunded Bonds;

(h) that it and the Trustee will not make any investment or do any other act or thing during the period that any Series V-1 Bonds are Outstanding under the Indenture which would cause any of the Series V-1 Bonds or the Refunded Bonds to become or be classified as arbitrage bonds within the meaning of Section 148 of the Code; provided, however, it will not be an event of default under the Indenture if the interest on the Series V-1 Bonds becomes includable in gross income for federal income tax purposes or otherwise subject to federal income taxes pursuant to any provision of the Code which is not currently in effect and in existence on the date of issuance of the Series V-1 Bonds; and

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(i) to do any and all things necessary in order to maintain the pledge, assignment and grant of a lien on and security interest in the Pledged Funds as valid, binding, effective and perfected, all as provided in the Indenture.

Other Indebtedness

Except to the extent permitted in the Indenture for the issuance of Additional Bonds (both Parity Bonds and Subordinated Bonds), for so long as any of the Bonds are outstanding, the University will not issue bonds or other evidences of indebtedness or enter into leases that are prior to or on a parity with the Bonds, but may issue bonds or other evidences of indebtedness for any of the purposes set forth in the Indenture with a lien on Student Fees that is junior to the Bonds.

Investments

All moneys on deposit in the Funds established under the Indenture held by the University may be commingled for investment purposes with the University’s other investments and invested as permitted by law. The Funds held by the Trustee will be invested by the Trustee as directed by the University in Permitted Investments. Interest earned or gains or losses realized on Funds held by the Trustee will be credited or debited to the Fund in which it is earned, except that interest earned or gains realized on any amount held in the Reserve Fund from time to time will be credited to the Sinking Fund, as described above.

The 2012 Project Fund and Rebate Fund will be managed pursuant to the Rebate Agreement and invested as permitted by law. Investment income on such funds will be retained therein, except that investment income on amounts in the 2012 Project Fund may be transferred to the Sinking Fund or the Rebate Fund.

Defaults and Remedies

Any of the following events is an “Event of Default” under the Indenture:

(a) default is made in the payment by the University of the principal of any one or more of the Bonds when the same becomes due and payable by lapse of time, by call for redemption or otherwise; or

(b) default is made in the payment by the University of any interest on any one or more Bonds when the same becomes due and payable as therein expressed; or

(c) default is made by the University or any of its officers in the performance of any of the other covenants, conditions or obligations in the Bonds or in the Indenture expressed and such default is not remedied within 30 days after written notice to do so from the Trustee, which may serve such notice in its discretion and will serve the same at the written request of the holders of not less than 25% in the principal amount of Bonds then outstanding under the Indenture or of the provider of any Credit Support Instrument or a Reserve Fund Credit Instrument; or

(d) the University (i) admits in writing its inability to pay its debts generally as they become due, (ii) has an order for relief entered in any case commenced by or against it under federal bankruptcy laws, (iii) commences a proceeding under any federal or state bankruptcy, insolvency, reorganization or similar laws, or has such a proceeding commenced against it and has either an order of insolvency or reorganization entered against it or has the proceeding remain undismissed and unstaged for 90 days, (iv) makes an assignment for the benefit of creditors, or (v) has a receiver or trustee appointed for it for the whole or substantial part of its property.

Upon any Event of Default, the Trustee may, in its discretion, and, upon the written request of the holders of 25% in principal amount of the Bonds then Outstanding or the provider of any Credit Support Instrument or Reserve Fund Credit Instrument and upon being indemnified to its satisfaction by the party requesting such action, will proceed to protect and enforce its rights and the rights of the holders of the Bonds by suit or suits at law or in

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equity, whether for the specific performance of any covenant or agreement in the Indenture, or in execution or aid of any power granted in the Indenture, or for the enforcement of any other proper legal or equitable remedy as the Trustee, being advised by the counsel, deems most effectual to protect and enforce its rights and the rights of such holders of the Bonds.

All rights of action under or in respect of the Indenture may be exercised only by the Trustee and no holder of any Bond will have any right to institute any suit, action or proceeding at law or in equity for any remedy under the Indenture or by reason of the Indenture, unless and until the Trustee has received the written request of the holders of not less than 25% in principal amount of the Bonds then Outstanding (or any provider of any Credit Support Instrument or Reserve Fund Credit Instrument to the extent provided in the applicable Supplemental Indenture) and has been offered reasonable indemnity and has refused or for 30 days thereafter neglected to institute such suit, action or proceeding. The making of such request and the furnishing of such indemnity are in each case conditions precedent to the execution and enforcement by any such holder of the powers and remedies given to the Trustee under the Indenture and to the institution and maintenance by any such holder of any action or cause of action for any remedy under the Indenture. The Trustee may, in its discretion, and, when thereunto duly requested in writing by the holders of at least 25% in principal amount of the Bonds then Outstanding or the provider of any Credit Support Instrument or Reserve Fund Credit Instrument and furnished indemnity satisfactory to it against expenses, charges and liabilities, will take default on the part of the University as the Trustee may deem expedient in the interest of the holders of the Bonds Outstanding.

The Indenture appoints the Trustee the special agent and representative of the holders of Bonds and vests with the Trustee full power in their behalf to effect and enforce the Indenture for their benefit as provided therein. However, the holders of 51% or more in principal amount of the Bonds then outstanding, in case of any Event of Default, or of any other event entitling the Trustee to proceed under the Indenture, will have the right from time to time to direct and control the method and place of conducting any and all proceedings by the Trustee for the enforcement of any of the provisions of the Indenture or for the appointment of a receiver and any other proceedings taken by virtue of any provisions of the Indenture.

Unless an Event of Default has occurred and has not been cured, the University will remain in full possession and control of the Student Fees. Upon the occurrence of an Event of Default, the Trustee will have the right, upon a demand to the University, to have all Student Fees deposited, as they are collected, in a Student Fee Fund created by the Indenture to be maintained by the Trustee, to invest that Fund in Permitted Investments, to apply amounts in the Fund to the payment of principal of or interest on the Bonds and the maintenance of the Reserve Fund and to remit all other amounts in the Fund not needed to be held aside for those purposes to the University.

Defeasance

If (1) the University pays, or causes to be paid, or there is otherwise paid to the holders of all Bonds, the principal of and the applicable redemption premium, if any, and interest due or to become due thereon, at the times and in the manner stipulated therein and in the Indenture, (2) the University pays all expenses and fees of the Trustee and any Paying Agent, (3) the University keeps, performs and observes all and singular the covenants and promises in the Bonds and in the Indenture expressed as to be kept, performed and observed by it or on its part, and (4) the University pays or causes to be paid all the amounts owed under any Credit Support Instrument or Reserve Fund Credit Installment, then the pledge of Pledged Funds and other moneys and securities pledged under the Indenture and all covenants, agreements and other obligations of the University to the Bondholders, will thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee will cause an accounting for such period or periods as is requested by the University to be prepared and filed with the University, and upon request of the University will execute and deliver all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee and the Paying Agent will pay over to or deliver to the University all moneys or securities held by them pursuant to the Indenture which are not required for the payment of principal of, applicable redemption premiums, if any, and interest on the Bonds. If the University pays or causes to be paid, or makes provision for payment in accordance with the Indenture, to the holders of all Outstanding Bonds of a particular series, or of a particular maturity within a series, the principal of and the applicable redemption premium, if any, and the interest due or to become due thereon, at the times and in the manners stipulated therein and in the Indenture, such Bonds will cease to be entitled to any lien, benefit or security under the Indenture (except with

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respect to the moneys or Federal Securities and Escrowed Municipals deposited as required by the Indenture) and all covenants, agreements and obligations of the University to the holders of such Bonds will thereupon cease, terminate and become void and be discharged and satisfied.

Bonds or principal installments thereof and interest thereon for the payment or redemption of which monies have been set aside and are held in trust by the Trustee (through irrevocable deposit by the University of funds for such payment or redemption or otherwise) at the maturity or redemption date thereof will be deemed to have been paid within the meaning and with the effect expressed in the preceding paragraph. Any Outstanding Bonds of any series or of a particular maturity within a series will prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in the preceding paragraph if (a) in case any of said Bonds are to be redeemed on any date prior to their maturity, the University has given to the Trustee irrevocable instructions accepted in writing by the Trustee to give notice of redemption of such Bonds on said date, (b) there has been deposited with the Trustee either monies in an amount which are sufficient, or Federal Securities or Escrowed Municipals the principal of and the interest on which when due will provide monies which, together with other monies, if any, deposited with the Trustee at the same time, will be sufficient, to pay when due the principal of and the applicable redemption premium, if any, and interest due and to become due on said Bonds on and prior to the redemption date or maturity date thereof, as the case may be, and (c) in the event said Bonds do not mature and are not to be redeemed within the next succeeding 60 days, the University has given the Trustee in form satisfactory to it irrevocable instructions accepted in writing by the Trustee to give notice as soon as practicable, to the holders of such Bonds that the deposit described in clause (b) above has been made with the Trustee and that said Bonds are deemed to have been paid and stating such maturity or redemption date upon which monies are to be available for the payment of the principal of and the applicable redemption premium, if any, on said Bonds. Neither the Federal Securities or Escrowed Municipals nor monies deposited with the Trustee nor principal or interest payments on any such Federal Securities or Escrowed Municipals may be withdrawn or used for any purpose other than, and must be held in trust for, the payment of the principal of and the applicable redemption premium, if any, and the interest on said Bonds; provided that any cash received from such principal or interest payments on such Federal Securities or Escrowed Municipals deposited with the Trustee, (i) to the extent such cash will not be required at any time for such purpose, will be paid over to the University as received by the Trustee, free and clear of any trust, lien or pledge securing said Bonds or otherwise existing under the Indenture, and (ii) to the extent such cash will be required for such purpose at a later date, will, to the extent practicable, be reinvested in Federal Securities or Escrowed Municipals maturing at times and in amounts sufficient to pay when due the principal of and the applicable redemption premium, if any, and interest to become due on said Bonds on and prior to such redemption date or maturity date thereof, as the case may be, and interest earned from such reinvestments will be paid over to the University, as received by the Trustee, free and clear of any trust, lien or pledge. Federal Securities or Escrowed Municipals, as described in this paragraph, mean and include only such securities which are not callable at the option of the issuer except for Escrowed Municipals for which irrevocable instructions to redeem on a certain date have been given.

The escrow or defeasance agreement accomplishing the defeasance described in the preceding paragraph may provide that such escrow may be restructured to provide for an earlier or a later redemption of Bonds being defeased thereby than contemplated in the original defeasance or escrow agreement or to provide that the escrow may be restructured to allow a defeasance to maturity or Bonds previously intended to be called for redemption at a prior date pursuant to the original escrow or defeasance agreement. Any such restructuring of an escrow may only be accomplished when, to the reasonable satisfaction of the Trustee, the continued sufficiency of the escrow to accomplish its intended tasks has been verified and when the Trustee has received an opinion of bond counsel that such restructuring will not adversely affect the tax status of interest on the Bonds nor result in a violation of any other applicable federal tax or securities laws.

The term “Federal Securities,” as used in the preceding paragraphs under the caption “Defeasance”, means direct obligations of or obligations the timely payment of principal of or interest on which is unconditionally guaranteed by the United States of America.

Any moneys held by the Trustee or a Paying Agent in trust for the payment and discharge of any of the Bonds which remain unclaimed for five years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee or Paying Agent at such date, or for five years after the date of deposit of such moneys if deposited with the Trustee or Paying

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Agent after the said date when such Bonds become due and payable, will, at the written request of the University, be repaid by the Trustee or Paying Agent to the University, as its absolute property and free from trust, and the Trustee and Paying Agent will thereupon be released and discharged with respect thereto and the Bondholders must look only to the University for the payment of such Bonds.

Supplemental Indentures; Amendments

The Trustee and the University may, from time to time, enter into Supplemental Indentures for any of the following purposes without any consent of, action by or notice to the Bondholders:

(a) to restrict the issue and the purposes of issue of Additional Bonds under the Indenture by imposing additional conditions and restrictions as long as the same do not impair the security afforded by the Indenture;

(b) to add to the covenants and agreements of the University in the Indenture or to surrender any right or power in the Indenture reserved to or conferred upon the University;

(c) to describe the terms of a new series of Bonds;

(d) to make such provisions in regard to matters or questions arising under the Indenture as may be necessary or desirable but not inconsistent with the Indenture;

(e) otherwise to modify any of the provisions of the Indenture or to relieve the University from any of the obligations, conditions or restrictions contained in the Indenture; provided that no such modification will be or become operative or effective or in any manner impair any rights of the Bondholders or the Trustee (except as otherwise provided or permitted pursuant to the Indenture), while any Bonds of any series issued prior to the execution of such Supplemental Indenture remain outstanding; and provided further that such Supplemental Indenture is specifically referred to in the text of all Bonds of any series issued after the execution of such Supplemental Indenture; and provided, also, that the Trustee may in its uncontrolled discretion decline to enter into any such Supplemental Indenture which in its opinion may not afford adequate protection to the Trustee when such Supplemental Indenture becomes operative;

(f) to add to the powers, duties or obligations of the Trustee or to impose requirements with respect to the qualification or disqualification of any bank or trust company to act as Trustee under the Indenture;

(g) to further restrict investments to be made by the Trustee or University;

(h) to grant additional rights to the provider of any Credit Support Instrument or Reserve Fund Credit Instrument, including, if desired, the creation of a special reserve therefor;

(i) to provide for partial release of the lien on and security interest in Student Fees as provided in the Indenture; or

(j) for any other purpose not prohibited by the terms of the Indenture and which do not impair the security afforded thereby, or for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective or inconsistent provision in the Indenture or in any Supplemental Indenture.

The holders of not less than 51% in principal amount of the Bonds Outstanding, or 51% in principal amount of any series of Bonds Outstanding affected by such modification or alteration, will have the power to authorize any modification or alteration of the Indenture or any Supplemental Indentures. However, no such modification or alteration may (i) affect the University’s obligation to pay the debt service on the Bonds, including the Series V Bonds, in respect to date of payment, place of payment and amount, (ii) give to any Bond or Bonds secured by the Indenture any preference over any other Bond or Bonds so secured in a manner inconsistent with the

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terms of the original issuance thereof, (iii) authorize the creation of any lien upon any of the property the income of which is or will, in the future, be payable to the Trustee under the Indenture, (iv) deprive any Bondholder of the security afforded by the Indenture, (v) reduce the percentage of principal amount of Bonds required by the provisions of the Indenture for any action, or (vi) extend the maturity or interest payments, reduce the interest rate, change the formula for determining the variable interest rate or reduce the maturity amount of any Bond without the consent of each Bondholder so affected.

No Recourse

The Indenture and the Bonds are made, executed and negotiated under and pursuant to the terms and conditions of the Act. No recourse may be had for the performance of any covenant contained in the Indenture nor for the payment of the principal of or premium, if any, or interest on the Bonds upon the State of Indiana or the University, or upon the property or funds of the State of Indiana or the University, except from the Pledged Funds to the extent and in the manner authorized by law and the Indenture.

No recourse under or upon any obligation, covenant or agreement contained in the Indenture or any Bond may be had against any officer, trustee, employee, agent or representative of the University, and no personal liability whatever will attach to or be incurred by the present or any future officer, trustee, employee, agent or representative of the University by reason of any of the obligations, covenants or agreements contained in the Indenture or any of the Bonds, or be implied therefrom.

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APPENDIX E

FORM OF OPINIONS OF CO-BOND COUNSEL

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October 26, 2012

The Trustees of Indiana University J.P. Morgan Securities LLC, as representative of Bloomington, Indiana the Underwriters New York, New York The Bank of New York Mellon Trust Company, N.A., as Trustee Indianapolis, Indiana

Re: Indiana University Tax-Exempt Student Fee Bonds, Series V-1 (the “Bonds”) issued by The Trustees of Indiana University (the “Corporation”) pursuant to a Trust Indenture dated as of October 1, 1985, as heretofore supplemented and amended, and as further supplemented by a Twenty-First Supplemental Indenture dated as of October 15, 2012 (collectively, the “Indenture”), to The Bank of New York Mellon Trust Company, N.A., Indianapolis, Indiana, as trustee (the “Trustee”); Principal amount $60,265,000

Ladies and Gentlemen:

We have examined a transcript of the proceedings had by the Corporation relative to the authorization, issuance and sale of the Bonds to provide funds for the financing of the Projects and the refunding of the Refunded Bonds and QES Notes (as those terms are defined in the Indenture), as certified by the Secretary or Assistant Secretary of the Corporation, and the Indenture as executed and delivered for the purpose of securing the payment of the Bonds and the interest thereon.

We have relied upon a certified transcript of proceedings and other certificates and representations of the Corporation, including certain tax covenants and representations (the “Tax Covenants”), and have not undertaken to verify any facts by independent investigation.

Based on the foregoing and our review of such other information, papers and documents as we believe necessary or advisable, we are of the opinion that:

1. The Indenture has been duly authorized, executed and delivered by the Corporation and, assuming due authorization, execution and delivery thereof by the Trustee, is a valid and binding agreement of the Corporation, enforceable in accordance with its terms.

2. The Bonds have been duly authorized, executed and issued and are the valid and binding obligations of the Corporation, enforceable in accordance with their terms.

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The Trustees of Indiana University The Bank of New York Mellon Trust Company, N.A. J.P. Morgan Securities LLC October 26, 2012 Page 2

3. Under existing laws, judicial decisions, regulations and rulings, the interest on the Bonds is exempt from income taxation in the State of Indiana. This opinion relates only to the exemption of interest on the Bonds from state income taxes.

4. Under existing laws, regulations, rulings and judicial decisions, the interest on the Bonds is excludable from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for purposes of computing the federal alternative minimum tax on certain corporations. This opinion is conditioned on continuing compliance by the Corporation with the Tax Covenants. Failure to comply with the Tax Covenants could cause interest on the Bonds to lose the exclusion from gross income for federal income tax purposes retroactive to the date of issue.

It is to be understood that the rights of the owners of the Bonds, the Corporation and the Trustee and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore and hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. It is also to be understood that the rights of the owners of the Bonds, the Corporation and the Trustee and the enforceability of the Bonds and the Indenture may be subject to the valid exercise of the constitutional powers of the State of Indiana and the United States of America.

Very truly yours,

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October 26, 2012

The Trustees of Indiana University J.P. Morgan Securities LLC, as representative of Bloomington, Indiana the Underwriters New York, New York The Bank of New York Mellon Trust Company, N.A., as Trustee Indianapolis, Indiana

Re: Indiana University Taxable Student Fee Bonds, Series V-2 (the “Bonds”) issued by The Trustees of Indiana University (the “Corporation”) pursuant to a Trust Indenture dated as of October 1, 1985, as heretofore supplemented and amended, and as further supplemented by a Twenty-First Supplemental Indenture dated as of October 15, 2012 (collectively, the “Indenture”), to The Bank of New York Mellon Trust Company, N.A., Indianapolis, Indiana, as trustee (the “Trustee”); Principal amount $47,485,000

Ladies and Gentlemen:

We have examined a transcript of the proceedings had by the Corporation relative to the authorization, issuance and sale of the Bonds to provide funds for the refunding of the Refunded Bonds (as defined in the Indenture), as certified by the Secretary or Assistant Secretary of the Corporation, and the Indenture as executed and delivered for the purpose of securing the payment of the Bonds and the interest thereon.

We have relied upon a certified transcript of proceedings and other certificates and representations of the Corporation, including certain tax covenants and representations (the “Tax Covenants”), and have not undertaken to verify any facts by independent investigation.

Based on the foregoing and our review of such other information, papers and documents as we believe necessary or advisable, we are of the opinion that:

1. The Indenture has been duly authorized, executed and delivered by the Corporation and, assuming due authorization, execution and delivery thereof by the Trustee, is a valid and binding agreement of the Corporation, enforceable in accordance with its terms.

2. The Bonds have been duly authorized, executed and issued and are the valid and binding obligations of the Corporation, enforceable in accordance with their terms.

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3. Under existing laws, judicial decisions, regulations and rulings, the interest on the Bonds is exempt from income taxation in the State of Indiana. This opinion relates only to the exemption of interest on the Bonds from state income taxes.

It is to be understood that the rights of the owners of the Bonds, the Corporation and the Trustee and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore and hereafter enacted and that their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. It is also to be understood that the rights of the owners of the Bonds, the Corporation and the Trustee and the enforceability of the Bonds and the Indenture may be subject to the valid exercise of the constitutional powers of the State of Indiana and the United States of America.

Very truly yours,

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APPENDIX F

SUMMARY OF REFUNDED BONDS

The Refunded Bonds consist of the following:

1. The Trustees of Indiana University, Indiana University Student Fee Bonds, Series P, described below (the “Refunded Series P Bonds”):

Maturity Date Principal Amount Interest Rate CUSIP

August 1, 2015 $8,320,000 5.00% 455167J49 August 1, 2016 6,595,000 5.00 4551675N2 August 1, 2017 3,045,000 5.00 4551675P7 August 1, 2018 10,670,000 5.00 4551675Q5 August 1, 2019 8,050,000 5.00 4551675R3 August 1, 2020 8,470,000 5.00 4551675S1 August 1, 2022 2,910,000 5.00 455167K39 August 1, 2023 3,060,000 5.00 455167K47 August 1, 2024 3,220,000 5.00 455167K54 August 1, 2026 2,150,000 4.75 455167K62

The Refunded Series P Bonds will be called for redemption prior to maturity on August 1, 2014.

2. The Trustees of Indiana University, Indiana University Student Fee Bonds, Series Q, described below (the “Refunded Series Q Bonds”):

Maturity Date Principal Amount Interest Rate CUSIP

August 1, 2017 $1,610,000 5.000% 455167M78 August 1, 2018 1,690,000 5.000 455167M86 August 1, 2019 1,780,000 5.000 455167M94 August 1, 2020 1,875,000 5.250 455167N28 August 1, 2021 1,965,000 4.600 455167N36 August 1, 2022 2,060,000 4.650 455167N44 August 1, 2023 2,160,000 4.650 455167N51 August 1, 2024 2,260,000 4.700 455167N69 August 1, 2025 2,375,000 5.125 455167N77 August 1, 2026 2,495,000 4.700 455167N85

The Refunded Series Q Bonds will be called for redemption prior to maturity on August 1, 2016.

3. The Trustees of Indiana University, Indiana University Student Fee Bonds, Series R, described below (the “Refunded Series R Bonds”):

Maturity Date Principal Amount Interest Rate CUSIP

August 1, 2017 $2,330,000 5.00% 455167Q74 August 1, 2018 2,450,000 5.00 455167Q82 August 1, 2019 2,570,000 4.40 455167Q90 August 1, 2020 2,685,000 4.45 455167R24 August 1, 2021 2,810,000 4.50 455167R32 August 1, 2022 2,935,000 4.55 455167R40

The Refunded Series R Bonds will be called for redemption prior to maturity on August 1, 2016.

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